Course and Section no.

: EMBA-660 Sec-01 Semester: Fall 2011

Date of Submission: 0-11-2011 !D ": 0#16260$0
Assi%nment ": 02
&eadin%: Durable Asset 'aluation
E(ecuti)e summar*: This report will provide the different valuation concepts to
determine the value of a real life durable asset. We have an apartment at House
# 1, Road # 5, Sector # 7, ttara, !ha"a. #ts si$e is 15%% s&uare fit and it's a
product of (T#. We purchased it in )ebruar*, +%11. #ts purchase value was (!T
,-,%%,7%% e.cept the re/istration cost. 0ow we will /o for the followin/ valuation
concepts1
1. &o+ +ould +e determine t,is )alue: 2t first we determine the value of the land
belon/s to the apartment, the construction cost of the apartment and value of
the brand. Then compare the value with the other brands in the same location.
2fter considerin/ the above we determined the final price as (!T ,-,%%,7%%.
Calculation:
3and value 4 %.5 "atha 5 (!T 1,%%,%%,%%% 4 (!T 5%,%%,%%%
6onstruction cost 4 15%%sft 5 (!T 15%% 4 (!T ++,5%,%%%
6ar par"in/ and tilit* cost 4 1 5 (!T 5,%%,%%% 4 (!T 5,%%,%%%
(rand value 4 (!T 11,5%,7%% 4 (!T 11,5%,7%%
-otal )alue . BD- #$/00/000
1
2. 1,at is t,e resale )alue: #f the holder of the 2sset wishes to resale the 2sset
to another part*, this would be the amount of mone* that could be e.pected to be
made from the transaction.
Calculation:
#ts resale value will be 415%%sft 5 (!T ,,7%%7 (!T 5,%%,%%%4 (!T 1,85,5%,%%%
as the present value (T# product is (!T -,%%% per s&uare fit. Here we consider
(!T ,7%% per sft as a resale value.
2. 1,at is t,e re3lacement )alue: The value of an asset as determined b* the
estimated cost of the replacin/ it.
Calculation:
The resale value of the e.istin/ apartment is (!T 1,85,5%,%%% and #f we want to
bu* a new one from same compan* then it will cost us 415%%sft 5 (!T -,%%% 7
(!T 5,%%,%%%4 (!T 1,9%,%%,%%%. So the replacement value will be (!T
9,5%,%%%.
. 1,at is t,e fair )alue: The fair value of an asset is the amount at which that
asset could be bou/ht or sold in a current transaction between willin/ parties,
other than in a li&uidation. So the fair value of the apartment is resale value of the
apartment that is (!T 1,85,5%,%%%
4. 1,at is t,e mar5et )alue: The price as determined d*namicall* b* bu*ers and
sellers in an open mar"et is called mar"et value. So the mar"et value of the
apartment is e&ual to the resale value of the apartment that is (!T 1,85,5%,%%%
6. 1,at is t,e o33ortunit* )alue: The opportunit* value is the value that we will
/ain from the same field for the same amount of mone*. Here if we bu* a land for
the same amount of mone* the resale value will be less. So the opportunit* value
from the apartment is hi/her from this field.
2
0. 1,at is t,e true )alue: The price a consumer will pa* for a product. So the true
value of the apartment is e&ual to the resale value of the apartment that is (!T
1,85,5%,%%%
#. 1,at is t,e boo5 )alue: The value of an asset as it appears on a balance
sheet, e&ual to cost minus accumulated depreciation. 2s there is no depreciation
for apartment in our countr* so the boo" value of the apartment will be the
purchase value the of the apartment that is (!T ,-,%%,7%%
$. &o+ muc, are +e +illin% to sell it for: We will sale it for (!T 1,85,5%,%%%
10. Are all t,ese 3rices t,e same: :.cept the purchase value, replacement value,
opportunit* value and the boo" value the rest value are same. The purchase
value will be alwa*s less the resale value in our countr* for apartment. The
replacement value is the different thin/. #t is the cost that we have to pa* for a
new one b* /ivin/ the old one. The opportunit* cost is the cost that we will /ain
from the same field for the same amount of mone*. Here if we bu* a land for the
same amount of mone* the resale value will be less. The boo" value is the cost
value of apartment that is (!T ,-,%%,7%%
3