Years Purchase & Capitalised value, Book Value.pptx

It is helpful for civil engineering students

1. Chapter: V ALU A TION Prepared by Er. Rajan Vinayak AP, CED ESTIMATING & COSTING ( BCIE1-629 ) Department of Civil Engineering BFCET

2. Market value: the market value of a property is the amount which can be obtained at any particular time from the open market if the property is put for sale. The market value will differ from time to time according to demand and supply. This value is changes from time to time for various reasons such as change in industry, change on fashion, means of transport, cost of material A nd labo u r e t c. Department of Civil Engineering

3. Book value: Book value is the amount shows in the account book after allowing necessary depreciation. The book value of property at a particular year is the original cost minus the amount of depreciation year. The end of the utility period of the property the book value will be only scrape value. Department of Civil Engineering

4. Book value : Department of Civil Engineering

5. Rateable value: R ateable value is the net annual value of a property, which is obtained after deducting the amount of yearly repairs from the gross income . Municipal and other taxes are charged at a certain percentage on the rateable value of the property.

6. Annuity : is the annual periodic payments for repayments of the capital amount invested by a party. Annuity is either paid at the beginning or at end of each period of instalment . Annuity Due- Payments continues for DEFINITE period Deffered Annuity- Payment begins at some future date after no of years Perpetual Annuity- Continue for INDEFINITE period Though Annuity- Amount may be paid in 12, 6 or 3 monthly installments

7. Capitalized Value of a Property The capitalized value of a property is the amount of money whose annual interest at the highest prevailing rate of interest will be equal to the net income from the property. To determine the capitalized value of a property, it is required to know the net income from the property and the highest prevailing rate of interest .  Capitalized Value = Net income x year’s purchase @5% interest = 1000 Rs x 100/5 = 20000 Rs @8% interest = 1000 Rs x 100/8 = 12500 Rs Which means Higher the rate of interest, Capitalised Value of built property goes down, then rent shall have to go up.

8. Year’s purchase(Y.P ): The capitalize value which needs to be paid once for all to receive a net annual income of R s 1 b y way of interest at the prevailing rate of interest for an indefinite period or for a fixed no. of days . Example:- If Rent = 10,000 Rs YP 4 years @ 8% = 3.3121 Capitalised value = 33,121 Rs If Rent = 10,000 Rs YP 4 years @ 10% = 3.1699 Capitalised value = 31,699 Rs

9. Year’s purchase(Y.P ): Here i = rate of interest per annum n= No of years

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