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Valuation and Capital Return as Inverse Problems

In: Innovation, Research and Development and Capital Evaluation

Author

Listed:
  • Petri P. Karenlampi

Abstract

The capital return rate is the relative time change rate of value. Correspondingly, the current value can be produced in terms of value change rate divided by capital return rate. There is a variety of ways to approximate the expected capital return rate. These are briefly discussed. The approximation of the value change rate is still more variant, depending on the type of businesses discussed. A variety of businesses may appear within a firm, in which case the value change rates must be integrated. An example is provided of a real estate firm benefiting from the growth of multiannual plants of varying age. It is found that the application of a duration-dependent reference capital return rate increases the value increment rate of juvenile stands and decreases that of mature stands, however increasing the valuation result of both.

Suggested Citation

  • Petri P. Karenlampi, 2022. "Valuation and Capital Return as Inverse Problems," Chapters, in: Luigi Aldieri (ed.), Innovation, Research and Development and Capital Evaluation, IntechOpen.
  • Handle: RePEc:ito:pchaps:248132
    DOI: 10.5772/intechopen.101943
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    File URL: https://www.intechopen.com/chapters/80138
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    More about this item

    Keywords

    capitalization; capital return rate; value increment rate; expected value;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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