2. Income approach valuation method

INCOME APPROACH VALUATION METHOD

Student name: Yully Catherine Pacanchique Date: March 25, 2020 Group number: 212032_31

INCOME APPROACH VALUATION METHOD

It is considered to be the value that is represented, by the current value of future profits derived from the ownership of a good and is generally measured through the capitalization of a specific level of income.

The revenue stream of a business can be valued in several ways, but there are four categories or types used mostly are:

1. P/U reasons (price/utility) 2. Capitalized income 3. Future income discounted 4. Future cash flow discounted

EXAMPLES

• Discounted Cash Flow:

Is analogous to the estimated net present value in finance

• Income Multiplier : It is the reason for the monthly or annual rent divided by the sale price.

• Atajo DCF : Constant for the duration of the rental period, an appropriate rate of return is deducted (possibly derived by referring to the risk-free rate of return obtained by government bonds, to which a risk forecast and adjustment are added lack of liquidity in property assets).

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