In This Lesson Lets Learn
How To Find Value Of Land. Most Of The Times This Points Required For
Civil Engineer. As A Civil Engineer It Is Most Before Going To Problem First We
Want To Know Some Terms In Valuation Calculation Process. That Points Are Below

Marker Value Mean A Property Can Be Sold In The Open Market
At A Particular Time . In The Open Market Mean That Any Person Desires To Make Purchase.

BOOK VALUE

Book Value Is The Value Of The Property Shown In The Account
Book For Particular Year The Book Value Reduce Gradually By Particular Amount
Or Purchase Every Year From The Initial Value Till It Reaches Crab Value.

ASSESSED VALUE

Assessed Value Of The Property Is The Recorded
value Of Municipality It Is Used To Determine The Taxes To Be Collected
From The Owner Of The Property.

SCRAP VALUE

This Is The Value Of
Machinery Obtained When It Is Useless. Actually The Scrap Value Of The Material
Is 10 Of Its Buy Cost.

SINKING FUND

Sinking Fund Is The
Amount It Has To Be Collect Specified Time Out Of Gross Income So That The End
Of Useful Life Of Any Property The Fund Should Accumulate To The Initial Cost
Of The Building.

The Sinking Fund Is
Considered As 90 Of The Initial Cost Of Building. Remaining 10 Of Cost Is
Claimed From Scarab Value Of Property

FORMULA FOR SINKING FUND

I = S

_{i}/(1+i)^{n}-1
I = annual installment required

S = tot amount of sinking fund

i = the rate of interest in decimal

n = number of year

Ie = coefficient of sinking fund.

CAPITALIZED VALUE

The capitalized value of the property is the amount the
invest on which at the highest prevailing rate would be equal to the net income
out of the property.

YEAR’S PURCHASE

Years purchase is defined as the capital sum required to be
invest in order to receive a net annual income as an annuity of rupee one at
fixed rate of interest.

Yp = 100 / i

I = Rate Of Interest

Capital Sum = Annual Income
X Year’s Purchase.

WORKOUT THE VALUATION OF A WEDDING HOUSE WITH THE FOLLOWING
DATA

(i)
Cost of land = RS .2500000 (USD .38461 )

(ii)
Gross
income = RS.5000000 (USD.76923 )

(iii)
Managing charges, electricity charges, municipal
taxes, etc is 30 % of gross income.

(iv)
Repair and maintenance of machinery all
equipment at 5% of their capital cost
which is RS.1200000 ( USD.18461 )

(v)
Sinking fund for machinery ( lifts, generator )
life is estimated as 25 years at 4 % after allowing 10 % scrap value

(vi)
Insurance premium is RS.20000 Per Annum (USD.307
)

Assume annual repair of house is 2% of gross income and yp
for 50 years at 8 % and redemption fo capitl at 4%

OUTGOINGS

(i)
Managing electricity ,municipal taxes per annum

= (30/100)
X 5000000

= 150000
Pa (USD.23076 )

(ii)
Repair and maintenance cost of machinery (lifts
)

= (5/100) X 1200000

= RS.60000 pa (USD.923 )

(iii)
Sinking fund deposits annually to replace the
machine in 25 years we have to get an amount = capital cost –10/100 X capital
cost

=1200000 – (10/100) x 1200000

=
RS. 1080000 (USD.16615 )

Annual deposit as sinking fund for machinery

=
1080000 x sinking fund co.efficient

=
1080000 x((0.04)/(1.04)

^{25}-1)
= RS.25933
(USD.398 )

(iv)
Insurance premium annually paid = RS.10000
(USD.153 )

(v)
Building repair annual cost = (2/100) X Gross income

= (2/100)
x 5000000

= RS.100000 (USD. 1538 )

Total out boings = 1500000 + 60000 + 25933 + 10000 + 100000

= RS.1695933 (USD.26091 )

Net annual income = gross income – outgoings

= 5000000 –
1625933

=
RS.3304067 ( USD.5083 )

FIND TOTAL VALUE OF PROPERTY

Capitalized value = net annual income x years purchase (y.p)

y.p = 1/(I

_{p}+I_{c})
I

_{p }= 0.08
I

_{c }= 0.04/(0.04)^{50}-1
= 0.0065

y.p = 1/(0.08+0.0065)

= 11.55

Capitalized value = RS.3304067 X 11.55

= RS.38175151
(USD.587310 )

Total value of wedding house = capitalized value + land cost

= 38175151 + 2500000

= RS .4.06
crores (USD.625771 )

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