Residual Value, often referred to in the context of depreciation or leasing, is the expected amount that an asset will be worth after its useful life or lease period has concluded. This value is calculated based on the assumption that the asset will be disposed of, sold, or traded in, and it is an important variable for financial accounting and projecting asset devaluation over time. For example, when purchasing a company car, the initial cost might be $30,000, and the estimated residual value after five years might be $10,000; thus, the depreciation over its useful life would be calculated accordingly. Similarly, in a lease agreement, understanding the residual value of the equipment or property being leased can impact decisions on whether to purchase the asset at the end of the lease term. This concept helps companies plan for future financial scenarios, including capital investments and operational costs.