Valuation

Question 1

What are the methods of Valuation?

Answer 1

• Comparable
• Investment
• Profits
• Depreciate Replacement
• Residual

Question 2

How is value calculated under the Cost Method?

Answer 2

Of course! I’ll design one flashcard per valuation method, formatted cleanly so you can study them easily.

Flashcard 1 — Comparable Method
Front:

Name: Comparable Method

Question: How is value determined in the Comparable Method?

Back:

Answer: By comparing recent sales of similar properties in the market. Adjustments are made for differences in size, location, and condition.

Use: Land, houses, standard commercial property.

Flashcard 2 — Investment Method
Front:

Name: Investment Method

Question: How is value determined in the Investment Method?

Back:

Answer: Based on the rental income generated, capitalized at an appropriate yield (capitalization rate).

Use: Offices, malls, apartments with stable leases.

Flashcard 3 — Profits Method
Front:

Name: Profits Method

Question: When is the Profits Method used and how does it work?

Back:

Answer: Used when properties are closely tied to a business. Value is based on the share of operating profits attributable to the property (e.g., hotels, theaters).

Use: Hotels, petrol stations, cinemas.

Flashcard 4 — Residual Method
Front:

Name: Residual (Development) Method

Question: What does the Residual Method value?

Back:

Answer: Values land or property by calculating the expected value after development, minus construction costs, fees, and developer profit.

Use: Land for development, redevelopment projects.

Flashcard 5 — Cost Method
Front:

Name: Cost (Depreciated Replacement) Method

Question: How is value calculated under the Cost Method?

Back:

By estimating the cost to rebuild the asset today, minus depreciation due to age and condition.

Use: Special-purpose assets (schools, hospitals, government buildings).

Question 3

What are the methods of Valuation?

Answer 3

• Comparable
• Investment
• Profits
• Depreciate Replacement
• Residual