Cost approach method
Cristian Felipe Castillo Soto Group: 158 Date: 09/04/2024
Definition:
The cost approach can also be understood as the valuation of the resources needed to obtain or replace existing assets with others of similar characteristics. It is based on the economic principle of substitution: a prudent investor would not pay for a technology asset more than it would cost to create or acquire a similar asset (chiesa- Gilardoni,2005).
Processes related and mathematical formulas to the calculation of
the value of technology using the selected method
Related Processes:
- Costs of the material used in the development of the technology .
- Labor costs: wages, taxes, insurance, workers compensation, overtime and other fees.
- Costs of new improvements and redesings etc.
The cost approach is also used to establish the costs that would be involved in creating similar technology; Taking into account the prices and payment rates at the valuation date, the following formula is proposed:
- Cost of reproduction/restoration of technology
How can companies create value from theirinnovation?
- With the introduction of a new product, service, or technology that significantly changes the existing market by meeting the needs of a previously underserved or ignored consumer segment.
- An organization can create value through both customer experience and customer service excellence.
- Value through new business opportunities, collecting and analyzing data to understand market dynamics. This helps businesses identify unmet needs and potential gaps in the market.
Cost approach method
Felipe Castillo
Created on April 9, 2024
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Transcript
Cost approach method
Cristian Felipe Castillo Soto Group: 158 Date: 09/04/2024
Definition:
The cost approach can also be understood as the valuation of the resources needed to obtain or replace existing assets with others of similar characteristics. It is based on the economic principle of substitution: a prudent investor would not pay for a technology asset more than it would cost to create or acquire a similar asset (chiesa- Gilardoni,2005).
Processes related and mathematical formulas to the calculation of the value of technology using the selected method
Related Processes:
- Costs of new improvements and redesings etc.
The cost approach is also used to establish the costs that would be involved in creating similar technology; Taking into account the prices and payment rates at the valuation date, the following formula is proposed:How can companies create value from theirinnovation?