“How can we predict the value of an item at the end of its lifetime?”
Due to the second law of thermodynamics, materials are bound to degrade over time, lowering both its function and value. Since an item might become less worthy in the future, then it would be very useful to know how it will change. Through analytical modeling and past experience, we can calculate something the Residual Value, or final worth of a product. Many leasing companies will calculate monthly payments based on this final value.