Enter the original cost of an asset or item, annual depreciation, and the life of the asset into the calculator to determine the residual value.

Residual Value Formula

The following formula is used to calculate a residual value.

RV = C - (C*D*A)
  • Where RV is the residual value ($)
  • C is the original cost of the item ($)
  • D is the annual depreciation ($)
  • A is the age of the asset (years)

To calculate the residual value, subtract the total depreciation from the original cost of the item.

Residual Value Definition

A residual value is defined as the total worth of an object or asset after a certain time period of use has passed. This is typically used when describing depreciating assets like cars or appliances.

Example Problem

How to calculate residual value?

  1. First, determine the original cost of the asset.

    For this example, we will look at a car that was purchased for $50,000.00.

  2. Next, determine the annual depreciation.

    In this case, the car is not used often and kept in good condition, so the annual depreciation is only 6%.

  3. Next, determine the age of the asset.

    The car in this example problem has been owned for 5 years.

  4. Finally, calculate the residual value.

    Using the formula above, the residual value is calculated as:
    RV = C – (C*D*A)
    RV = $50,000 – ($50,000*(6/100)*5)
    RV = $35,000.00.