The residual value, or salvage value, of property relates to the future value of an asset or the amount it costs to dispose of an asset after it is no longer useful.

The residual value is important because the higher its percentage is, the lower the payment.

**Formula to calculate residual value.**

**Example:**

Suppose you bought a refrigerator at $ 2,000 after five years you decide to sell it and you got 60% of its cost. Calculate the residual value.

Therefore, the residual value of the fridge was $ 1,200.