When you have new equipment that you're trying to finance or will lease out to other companies as part of your business, how much is it actually worth? A residual value analysis-M & E provides you with a range of important information about your new equipment, making it easier to prove value for a wide range of circumstances. When you have an accredited equipment appraiser estimate your equipment's value, you've got solid documentation for financial transactions and courtroom battles. Here's a quick look at how residual value is estimated.
To start, let's take a look at what residual value actually means. Residual value simply means the estimated future value of the asset from a Fair Market or Liquidation perspective. Based on the appraiser's experience and their understanding of how residual value is established in the equipment leasing industry, the value can be estimated based on a wide range of outside factors. These include:
All these factors have a place in determining an estimated residual value for the equipment. The appraiser will also take into account the specific machinery, emerging technological trends that may increase or decrease the market and similar aspects when determining the equipment's estimated residual value.
By having a residual value analysis-M & E performed on your business' machinery assets, you can ensure that you're able to leverage those assets to your benefit for a wide range of situations. However, the estimate of value you receive on your equipment is only as good as the appraiser who is completing the process. Make sure that you work with an accredited equipment appraiser to ensure that your estimated value is accurate and properly determined, allowing it to stand up in a wide range of real-world circumstances.