scholarly journals VALUE INFLUENCING MECHANISM OF GREEN CERTIFICATES IN THE DISCOUNTED CASH FLOW VALUATION

2014 ◽  
Vol 18 (3) ◽  
pp. 238-252 ◽  
Author(s):  
Jussi Vimpari ◽  
Seppo Junnila
Keyword(s):  
Cash Flow ◽  
Scientific Literature ◽  
Property Value ◽  
Discounted Cash Flow ◽  
Property Valuation ◽  
Valuation Model ◽  
Influencing Mechanism ◽  
Green Certificates ◽  
Industry Professionals ◽  
Discounted Cash Flow Valuation

The market value of green properties is already acknowledged in scientific literature, but it has still remained unclear how green certificates are incorporated into property valuation. In this study, value influencing mechanism of green certificates in property investment is studied. A widely used discounted cash flow (DCF) model for property valuation was constructed and communicated with spreadsheet to industry professionals for valuing an office property in metropolitan Finland. The goal was to understand the value influencing mechanism and even deeper to identify the differences in DCF parameters between certified properties and non-certified properties. The results show that a green certificate increases on average the property value with 9.0% in the DCF valuation model. Improved yield and net rental income were the main reasons for the higher property value. Interestingly, this is the first known study to empirically open the value influencing mechanisms of green properties presented in earlier theoretical studies.

Lease Terms, Option Pricing and the Financial Characteristics of Property

2003 ◽  
Vol 9 (3) ◽  
pp. 619-635 ◽  
Author(s):  
A.T. Adams ◽  
P.M. Booth ◽  
B.D. MacGregor
Keyword(s):  
United Kingdom ◽  
Option Pricing ◽  
Cash Flow ◽  
Discounted Cash Flow ◽  
Property Valuation ◽  
The United Kingdom ◽  
Financial Characteristics ◽  
Lease Contracts ◽  
Discounted Cash Flow Valuation

ABSTRACTTraditional and standard discounted cash flow valuation techniques are unable to deal with a variety of options contained in lease contracts. In the United Kingdom the most important embedded option is the upward-only rent review. This becomes more valuable to the landlord in an era of low demand and low inflation, as nominal market rents are more likely to fall. Lease contracts are freely negotiated between landlord and tenant, and alternative forms of rent review clause would fundamentally change the investment characteristics of property. Many other less common options also exist in lease contracts and these create further valuation difficulties. It is essential that property valuation techniques be developed that explicitly value the options in lease contracts.

SFAS No. 123 Disclosures and Discounted Cash Flow Valuation

2000 ◽  
Vol 14 (2) ◽  
pp. 169-189 ◽  
Author(s):  
Leonard C. Soffer
Keyword(s):  
Cash Flow ◽  
Stock Options ◽  
Stock Option ◽  
Financial Statement ◽  
Employee Stock Options ◽  
Financial Statement Analysis ◽  
Discounted Cash Flow ◽  
Employee Stock Option ◽  
Valuation Technique ◽  
Discounted Cash Flow Valuation

One of the cornerstones of financial statement analysis is the discounted cash flow valuation. Despite the broad use of this valuation technique, and the economic importance of employee stock options to firm values, there is little guidance on how employee stock options should be incorporated in a valuation. This paper provides a comprehensive approach to doing so, including consideration of the income tax implications of option exercises, the simultaneity of equity and option valuation, and the use of the disclosures that were mandated recently by Statement of Financial Accounting Standards No. 123. The paper provides a comprehensive example using Microsoft's fiscal 1997 financial statements and employee stock option disclosure. This paper should be of interest to academics and practitioners involved in corporate valuation and financial statement analysis.

Methodologies and Techniques for Determining the Value of an Aircraft

2020 ◽  
pp. 036119812095841
Author(s):  
Bijan Vasigh ◽  
Farshid Azadian ◽  
Kamran Moghaddam
Keyword(s):  
Cash Flow ◽  
Flow Analysis ◽  
Operating Costs ◽  
Asset Valuation ◽  
Discounted Cash Flow ◽  
Valuation Model ◽  
Exogenous Factors ◽  
New Generation ◽  
Operating Revenue

Aircraft valuation and the estimation of an accurate aircraft price is undoubtedly a challenging task that has significant consequences for airlines. This paper presents an asset valuation model to show how a series of endogenous as well as exogenous factors can influence the value of an aircraft. Specifically, a discounted cash flow methodology is used to forecast the valuation of an old or new generation aircraft. Both total operating revenue and aircraft operating costs are taken into account to devise a reliable pre-tax profit measurement that is used as the basis of the discounted cash flow analysis. A sensitivity analysis based on Monte Carlo simulation is utilized to identify which factors have a more significant influence on the suggested aircraft value. Therefore, it addresses how value fluctuates in response to economic fluctuations. Indeed, the calculated value of an aircraft highly depends on the underlying assumptions used. The calculated value is compared with available data in a case study for verification.

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