Earned value method

Definition of the discounted earnings method

In the context of the valuation of built-up land, the income value method represents, in addition to the material value method, an evaluation method for determining the common value. The income valuation is based on the net income. However, since this cannot be determined individually with the existing large number of properties, the valuation is carried out using the annual gross rent and a multiplier.

Annual gross rent according to § 79 BewG

According to Section 79 BewG, the gross annual rent represents the total annual fee that is to be paid for the property on the basis of a contractual agreement. This is the actual or usual rent. The duplicators are attached to the BewG as annexes and have the force of law. They cover the entire property with the ground, buildings and outdoor facilities, whereby the type of property, the year of construction and the number of inhabitants of the respective municipality are decisive.

Property value

The property value results from the multiplication of the annual gross rent by the duplicator, taking into account the deductions and surcharges for extraordinary real estate tax or value-reducing circumstances. Subject to Section 77 BewG, the rounded property value represents the unit value. Values determined using the discounted earnings method represent “preservation values” that are based on the maintenance and use of the property.

That Earned value-Procedure is used in the context of company valuation. With its help, the expected future net income is capitalized, which will be achieved in the long term with normal company performance. The risk of competition is taken into account in the future yield. An above-average performance of the previous company is only included if z. B. because of a good organization an additional pension can be expected in the future, depreciation on the Goodwill stay unconsidered.

To determine the earnings value as future earnings value, the present value of the future expected profits must be determined. This is done by discounting the expected profit amount to the valuation date. A distinction can be made between three situations

· If the company has a limited lifespan and profits vary from year to year
· With a limited lifespan of the company under consideration and the same annual profits
· The equation is simplified if the service life is unlimited and the profits are the same every year

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