1.) When is it appropriate to use the income approach? 2.) What are the pros and...

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Accounting

1.) When is it appropriate to use the income approach?
2.) What are the pros and cons of using the income approach?
3.) Describe what pre-tax and after-tax information is.
4.) What is the capitalization of benefits method?
5.) What is the discounted future benefits method?
6.) What is the excess earnings method?

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1Income Approach Definition Bill wants to buy a rental property Since this wont be the house where he lives his main concern is making a profit An investors point of view on value is often different than a retail buyer Bill might be willing to overpay for his own house but a rental should be treated as a business decision An income approach for appraisal is an ideal method in this case The income approach to property valuation is suitable for income producing real estate It weighs the potential income of the property to the purchase price Within the approach there are three common techniques These include direct capitalization discounted cash flow and gross income multiplier methods Direct Capitalization Direct capitalization is calculated by dividing the net See Answer

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