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How to Calculate Residual Value. Understanding how to calculate residual value can be important if you want to determine your monthly payments on a car lease and avoid paying more than you can afford.
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Residual value also known as salvage value describes the future value of a good in terms of absolute value in monetary terms after depreciation, and it is sometimes abbreviated into a percentage of the initial price when the item was new. It is one of the constituents of a leasing calculation or operation and is a key concept in accounting. It ...
Vehicle leasing is the leasing (or the use) of a motor vehicle for a fixed period of time at an agreed amount of money for the lease. It is commonly offered by dealers as an alternative to vehicle purchase but is widely used by businesses as a method of acquiring (or having the use of) vehicles for business, without the usually needed cash outlay.
To understand and apply this criterion, you need familiarize yourself with what is included in the minimum lease payments and how the present value is calculated. The minimum lease payments include the minimum rental payments minus any executory cost, the guaranteed residual value, the bargain purchase option, and any penalty for failure to ...
For example, a car with a residual value of $16,500 with $2,100 in payments left would cost $18,600. ... The rest of the payments in the lease term. The sales tax in your state.