What is residual value?

Residual value refers to the estimated amount that an asset is expected to be worth at the end of its useful life, after accounting for depreciation. This value reflects the asset's remaining worth when it is no longer usable for its intended purpose or has reached the end of its economic life.

The concept of residual value is important in various fields such as finance, accounting, and appraisal, as it helps in determining the overall cost and return on investment of an asset. Accurate estimation of residual value can significantly impact calculations regarding asset depreciation, investment analysis, and future cash flows.

While options addressing original cost and depreciation provide context, they don't capture the essence of residual value, which centers specifically on the value retained at the asset's economic life conclusion. Understanding residual value is crucial as it informs decisions about asset disposal or replacement, making option D the most accurate representation of the term.