Use the calculator tabs below to estimate residual value. Depending on the method you choose, enter inputs such as MSRP and residual percent (lease), original cost with a depreciation rate and age (rate-based), or original cost with salvage value, useful life, and age (straight-line).
- All Business Calculators
- Salvage Value Calculator
- Furniture Depreciation Calculator
- Appliance Depreciation Calculator
- Car Depreciation Calculator (% per year)
- Total Loss Calculator
- Boat Depreciation Calculator
Residual Value Formula
The following formula is one common way to estimate a residual value when depreciation is expressed as a percentage of the original cost (a linear-rate model).
RV = C - (C*D*A)
- Where RV is the residual value ($)
- C is the original cost of the item ($)
- D is the annual depreciation rate (per year, as a decimal; if you have a percent, divide by 100)
- 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 the estimated value of an asset at the end of a specified period (such as the end of a lease term or the end of its useful life). It is commonly used in accounting and leasing for depreciating assets such as vehicles, equipment, and appliances.
Example Problem
How to calculate residual value?
- First, determine the original cost of the asset.
For this example, we will look at a car that was purchased for $50,000.00.
- Next, determine the annual depreciation rate.
In this case, the car is not used often and kept in good condition, so the annual depreciation rate is only 6% per year.
- Next, determine the age of the asset.
The car in this example problem has been owned for 5 years.
- 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.
