Residual or Economic Value is defined as?

Residual or Economic Value pertains to the expected value that an asset will provide based on its anticipated uses within an economic context. This definition emphasizes the capability of the asset to generate economic benefits or utility during its lifespan, rather than merely reflecting its monetary worth at a given point in time.

Choosing the first option captures the essence of residual or economic value as it looks at how the asset is expected to contribute to economic activities or opportunities over its useful life. This perspective is vital for cost analysis and project management, as it helps in assessing not only the initial investment but also the potential future benefits derived from the asset's use.

The other definitions presented do pertain to certain value assessments but do not encapsulate the broader economic utility aspect. For instance, liquidation value focuses on the immediate returns from selling the asset's parts, while book value at liquidation relates strictly to accounting records rather than anticipated economic returns. The fair market value in a forced sale typically reflects a distressed selling scenario and does not account for long-term economic benefits, making it less relevant in determining the residual or economic value as defined in cost analysis principles.