Income approach method

Income approach method

Luis alexander sambobi doradoGroup Number: 212032_118

National Open and Distance University – UNADOctober – 2022

Income approach method

definition

The income approach is based on the principle of anticipation, whereby future net monetary benefits are converted into a present value estimate, using a discount rate appropriate to the type of property being studied.

Processes related

It is particularly common in the commercial area in the areas of asset valuation and in business valuation

mathematical formulas to the calculation of the value of technology using the selected method

The formula used as part of this approach varies a little depending on the type of trend involved. for the calculation of the technology value the following methods can be used Direct capitalization: involves identifying annual net operating income (maintenance costs, safe depreciation and any other factors that reduce profits) and dividing it by the capitalization rate. Discounted flow method: the annual cash flow is related to the discount rate to determine the capitalization rate.

Answer to the questionz

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