income approach


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income approach

A method of valuing real property by determining the net operating income over the useful life of the property and then translating that number to the present value via a discount rate.The present-value concept depends on the assumption that $1 today is worth more than 10 cents a year for the next 10 years,because of the purchasing power of the $1 to buy other investments that will yield a return over the next 10 years, and because of the effects of inflation, which decreases the amount of goods or services $1 will buy over the years. In order to compensate for these considerations,one would say that the value of 10 cents a year for the next 10 years is worth less than $1 today.How much less is the art and science of discounting.

References in periodicals archive ?
Through itsBCA Online University, valuation professionals now have an opportunity to expand their knowledge with studies in three key subjects: Financial Analysis, Industry Analysis, and the Income Approach.
There are three approaches to estimate the GDP: Output or Production approach, Expenditure approach, and Income approach.
Secondly it's your "wants", those additional purchases, such as extra social activities, holidays or a new car and this could be provided by an annuity or a more flexible drawdown income approach.
The court agreed the income approach was the correct approach to determine value.
Focus of the project will be inter alia the following: macroeconomic statistics, including national accounts: government finance statistics, house price index, supply and use tables, GDP by income approach, business and agricultural statistics: warehouse for business statistics, agro-monetary statistics, environmental and forestry statistics, science, technology and innovation statistics: modernise the current statistics system and further align it with EU standards, social statistics: use of administrative sources, creation of address register.
The income approach, which is sometimes referred to as GDP(I), is calculated by adding up total compensation to employees, gross profits for incorporated and non incorporated firms, and taxes less any subsidies.
the appraiser must consider the cost Or income approach to calculate an appropriate adjustment.
An income approach would measure fair value as the current value of future cash flows.
Generally, valuation of commercial real estate is based on one or a combination of the following three approaches: The market approach, the income approach, and the cost approach.
The assessors were essentially matching the cost approach to the income approach by adjusting the obsolescence percentages.
LOW to middle income earners will not see disposable income approach pre-recession levels until 2020 at best, a report from think-tank the Resolution Foundation has warned.