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 ?
The accounting firm used three methods to arrive at the fair value for Travellers, including discounted cash flow, market approach and income approach. The discounted cash flow, which used a weighted average cost of capital of 12 percent, yielded a fair value within the P5.00 to P5.80 and when cross-checked with market approach intersected at a value to P5.00 to P5.70, or an equity value equivalent to P79.1 billion to P90.2 billion, the accounting firm said.
As we speak right now, the fixed income approach is the right one.
The idea has been tested in other countries - and the Scottish government is being urged to scrap sanction-led employment benefits, like Universal Credit, in favour of the basic income approach.
The idea has been tested in other countries - andearlier this week the ECHO reportedthat the Scottish government is being urged to scrap sanction-led employment benefits - like Universal Credit -in favour of the basic income approach.
A Department manual also says that cost less depreciation is the preferred method because insufficient sales exist, and the income approach is impractical because of the Department's inability to obtain accurate income information from industries.
The income approach focuses on achieving high productivity, reduced cost of cultivation and remunerative price on the produce, with a view to earn higher profits from farming.
Income approach: The appraiser, utilizing the income approach, developed or used faulty information and overstated revenue or understated expenses (mainly involving multifamily and commercial appraisals).
In the Nigerian Gross Domestic Product Report (Expenditure and Income Approach) 2017, NBS observed that 'in summary, Nigeria's economy exited the recession and slowly started its recovery in the second quarter of 2017, although improvements in domestic consumption and business environment are still necessary to further stimulate growth.
The Minnesota Supreme Court previously affirmed the Tax Court's findings concerning gross building area and its rejection of petitioner's expert's sales comparison approach, but concluded that the Tax Court erred in rejecting petitioner's expert's discounted-cash-flow approach and, consequently, in failing to consider the income approach to value.
So, if a bucket retirement income approach is not an effective enough strategy, what's the solution?
The most commonly applied method is the lifetime income approach of Jorgenson and Fraumeni (1989, 1992).
The Tinsley (1996) suggested a combined approach utilising the most common formulas applied to medical practice valuations specifically, capitalisation of weighted earnings; goodwill calculated as a percentage of a practice's collections; income approach; valuation by start-up; and valuation of fixed assets and accounts receivable.