The value of any asset is usually dependent upon its ability to generate returns or how that asset performs its part as a contribution to the enterprise. The critical question is how best to determine the value? This generally requires not only extensive experience but also access to relevant information which can be used to benchmark.
Our approach towards Asset Valuations is to break down the asset into its various hypothetical components and then financially rebuild the asset to derive its value. This can be approached by analysing sales of similar assets however more often than not the value is determined by producing a discounted cash flow which also accounts for replacement and obsolescence. The technicality of this exercise is directly related to the complexity of the asset under consideration. Furthermore, it is the understanding of the principle of Estimated Useful Life which can provide a more accurate foundation for the derivation of its value.