Economics Capital Budgeting Questions
The different methods used for estimating the salvage value of an asset include:
1. Market value: This method estimates the salvage value based on the current market price of similar assets.
2. Residual value: This method estimates the salvage value by considering the expected value of the asset at the end of its useful life, taking into account factors such as wear and tear, obsolescence, and technological advancements.
3. Scrap value: This method estimates the salvage value based on the value of the asset's components or materials that can be sold as scrap.
4. Depreciated value: This method estimates the salvage value by subtracting the accumulated depreciation from the original cost of the asset.
5. Appraisal value: This method involves obtaining a professional appraisal to determine the salvage value of the asset based on its condition, market demand, and other relevant factors.