TOWARDS A MORE FLEXIBLE APPROACH TO VALUATION FORMULAE

Several anomalies exist between current valuation theories and the various practices in use in the financial world. Most practitioners are aware that the traditionally used valuation tables are based on the premise that all monies are received/paid in arrear and that interest is converted to the account at the end of the year. It has been argued, for many years, that the adjustments needed to accurately reflect financial practice were too difficult to implement and, in any event, made little difference to the valuation. However, with very large rentals no longer being uncommon and with the existence of the large property portfolios, increased accuracy in the calculation of YPs, etc, and a more flexible approach to properly reflect financial practices is not only possible but desirable. This paper sets out to demonstrate how such accuracy and flexibility can be achieved.