When considering the life of an asset, what factor refers to its value at the end of its useful life?

The correct choice addresses the concept of residual value, which is crucial when evaluating the life of an asset. Residual value refers to the estimated amount that an asset is expected to be worth at the end of its useful life, after accounting for depreciation. This value is significant for accounting purposes because it impacts how much depreciation expense is recognized over the asset's life. When planning for an asset's purchase and determining its financial viability, understanding the residual value helps in calculating total depreciation and assessing the potential return on investment once the asset has reached the end of its operational usefulness.

In contrast, initial cost represents the original purchase price of the asset, and while it is important for calculating depreciation, it does not reflect the asset's value after its useful life. Depreciation expense is the allocation of the asset's cost over its useful life, impacted by the residual value, but does not describe the end-of-life value itself. Market value can fluctuate based on current conditions and demand, which does not necessarily equate to the estimated residual value determined during the asset's lifespan. Therefore, residual value clearly defines the expected worth of an asset at the end of its time in service.