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Sagot :
the residual value was estimated to be 20% of cost. the estimated useful life is 2500= 21875-4375/x = 2500= 17500/x , x = 7
Thus, estimated useful life is 7 years.
What is residual value?
One of the components of a lease calculus or operation is residual value. It expresses the absolute future worth of a thing in monetary terms, and it is occasionally expressed as a percentage of the original purchase price.
An automobile is sold today for the advertised price of $20,000. Its value is legally set at $10,000 or 50% after 36 months of use and 50,000 kilometers. The credited amount, to which interest is applied, is therefore equal to $20,000 in current value less $10,000 in present value.
Contractually, residual values are handled either through closed contracts or through open contracts.
To learn more about residual value
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