contract and Economic rents
Payment made to the factor owner by the renter according to the mutual agreement. It is part of the contract rent paid to the factor owner for the use of the factor.
Discounted cash flow
considers future cash flows for each year of the anticipated holding period; in addition to cash expected from the sale of property at the end of the holding period to discount it at the present value. It captures anticipated change in net income over time.
Income capitalization rates
Net operating rate using the selling price, and, the rate of return known as the capitalization rate
Income-based valuation method
There are two approaches that are used for valuing a business - Discounted Cash Flow Method, and, Capitalization of Cash Flow Method. The firms are valued on the basis of the income the firm is expected to generate in the future.
Price or Capital Value = Rent / Yield
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