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Actual cash value, or ACV, is the amount of accounting value of an item after years of use. It does not indicate the actual value it would fetch on a market.
The formula for actual cash value is rather simple. ACV = Price - ((Price / Expected Life) x Current Age).
Let's say you bought a boat for $100,000. It is expected to last 30 years and you have now owned it for 5 years. ACV = 100,000 - ((100,000 / 30) x 5). The result will be $83,333.33.
Actual cash value is often used in the insurance industry for claims about items. It is used to determine the value of an item and can ignore actual economic factors and values.
Actual cash back can not be negative. It can be as low as zero, it can not be any lower.
Create Date: July 15, 2024
Last Modified Date: July 15, 2024
