Open AccessSignificance Of Residual Value In Asset Valuation
Author(s) -
Konrad Żelazowski
Publication year - 2014
Publication title -
studia i materiały towarzystwa naukowego nieruchomości
Language(s) - English
Resource type - Journals
ISSN - 1733-2478
DOI - 10.2478/remav-2014-0006
Subject(s) - residual income valuation , valuation (finance) , residual , passive income , cash flow , actuarial science , economics , asset (computer security) , econometrics , mathematics , computer science , finance , public economics , computer security , algorithm , tax reform , equity risk , gross income , state income tax
The construction of residual value is a key element of income methods in asset valuation. Its main task is to include asset value at the end of the forecasted cash flow period. Although it is common to apply simplified models of residual value in valuation practice, its meaning in shaping the final outcome is substantial. The aim of the article is to emphasize the role of using an appropriate formula in determining residual value in the valuation process. Moreover, alternative methods of estimating residual value will be presented together with scenarios of applying them.