Residual Value

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Dictionary Says

Definition of 'Residual Value'

How much a fixed asset is worth at the end of its lease, or at the end of its useful life.

If you lease a car for three years, its residual value is how much it is worth after three years. The residual value is determined by the bank that issues the lease before the lease begins. It is based on past models and future predictions. It is an important factor in determining the car's monthly lease payments (the other factors are the interest rate and tax). In capital budgeting projects, residual values reflect how much you can sell the asset for after the firm has finished using it or once the asset-generated cash flows can no longer be accurately forecasted.

Investopedia Says

Investopedia explains 'Residual Value'

If you are a business owner, let's say your desk has a useful life of seven years. How much the desk is worth at the end of seven years (its fair market value as determined by agreement or appraisal) is its residual value (also known as salvage value). To manage asset-value risk, companies that have lots of expensive fixed assets (e.g., machine tools, vehicles, medical equipment) may purchase residual value insurance to guarantee the value of properly maintained assets at the ends of their useful lives.

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Search results for

'Residual Value'

  • 2011 Cars With The Highest Resale Value - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0311/2011-Cars-With-Highest-Resale-Value.aspx
    ... Kelley Blue Book (KBB) has ranked vehicles according to their ability to hold
    value in its January/February 2011 Residual Value Guide. ...

  • Learn The Lingo Of Private Equity Investing

    http://www.investopedia.com/articles/stocks/09/abcs-of-private-equity.asp
    ... Cumulative Distribution and Residual Value When private equity investors consider
    a fund's investment track record, it is important for them to know the amount ...

  • New Wheels: Lease Or Buy?

    http://www.investopedia.com/articles/pf/05/042105.asp
    ... is the difference between the purchase price and the salvage, or residual value,
    which is the predetermined value of the car at the end of the lease period. ...

  • Stock-Picking Strategies: Fundamental Analysis | Investopedia

    http://www.investopedia.com/university/stockpicking/stockpicking1.asp
    ... 1) determining the sum of the discounted future cash flows from each of the next
    five years (years one to five), and (2) determining 'residual value', which is ...

  • Earnings Quality: Analyzing Specific Accrual Accounts ...

    http://www.investopedia.com/university/accounting-earnings-quality/earnings7.asp
    ... For example, the depreciation schedule for a factory is based on an expected
    life of 20 years with a residual value of 10%. If the ...

  • Valuing A Company Using The Residual Income Method

    http://www.investopedia.com/articles/fundamental-analysis/11/residual-income-model.asp
    ... Intrinsic Value With Residual Income Now that we've found how to compute residual
    income, we must now use this information to formulate a true value estimate ...

  • Digging Into Book Value

    http://www.investopedia.com/articles/stocks/07/book_value.asp
    ... which equals to $12.77. Each share of common stock has a book value - or
    residual claim value - of $12.77. At the time Wal Mart's ...

  • Earnings Quality: Why Aren't All Earnings Equal? | Investopedia

    http://www.investopedia.com/university/accounting-earnings-quality/earnings3.asp
    ... Estimating the residual value of assets and choice of depreciation schedule,
    High. Investments - Other, Investments in marketable securities ...

  • How Interest Rates Affect Property Values

    http://www.investopedia.com/articles/mortgages-real-estate/08/interest-rates-affect-property-values.asp
    ... capitalizing dividends or by discounting the cash flow stream (including any residual
    value) for a given investment period, the property value is determined. ...

  • Don't Go Broke Buying Bankrupt Stocks

    http://www.investopedia.com/articles/stocks/09/bankrupt-stocks.asp
    ... Don't Trade at Zero As we've seen with Delta, the residual value of the shares is
    zero, so why doesn't every stock trade at zero after declaring bankruptcy? ...

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