Local variable is redundant java

Can someone explain to me why it's giving me "local variable is redundant error"?

Because you can trivially write this without using a local variable.

public double depreciationAmount() {
    return cost * percentDepreciated;
}

Hence the local variable is unnecessary / redundant.

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However, I surmise that this is NOT a compiler error. It might be a compiler warning, or more likely it is a style checker or bug checker warning. It is something you could ignore without any risk to the correctness of your code ... as written.

Also, I would predict that once that the code has been JIT compiled (by a modern Hotspot JIT compiler ...) there would be no performance difference between the two versions.

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I won't attempt to address the issue as to whether the warning is appropriate¹. If you feel it is inappropriate, then https://stackoverflow.com/a/40709915/139985 explains how to suppress it.

^{1 - Except to say that it is too much to expect current generation style checkers to know when so-called explaining variables are needed. First you'd need to get people to agree on whether or not the variables are needed.}

Although not the case here, if having redundant local variable is desired (I've had one time where this was the case - without getting into specifics), here's how to suppress this specific warning.

@SuppressWarnings("UnnecessaryLocalVariable")
public double depreciationAmount() {
    double depreciationAmount = (cost * percentDepreciated);
    return depreciationAmount;
}