Appraisals and a List of Industry Appraisers
Plastics Equipment Appraisal Resources
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Methods of Surplus Plastics Equipment Appraisal
There are three commonly used methods of appraisal for used plastics equipment.
- Cost Approach Appraisal
- Market Approach Appraisal
- Income Approach Appraisal
The Cost Approach is based on the concept of replacement or reproduction cost as an indicator of value. A prudent investor would not be expected to pay more for an item than the amount for which it could be purchased new. Further, to the extent that a particular item provides less utility than a new one, its value will be less than the cost of a new replacement or reproduction. To account for this difference, the replacement/reproduction cost new is adjusted for losses in value due to physical depreciation, functional obsolescence, and economic obsolescence.
The Market Approach involves a direct comparison of the property being appraised to similar properties that have sold in the same or in a similar market. This approach is based on the principle of substitution which implies that a prudent person will not pay more to buy a property than it will cost to buy a comparable substitute property.
The Income Approach is based on the present value of cash flow that an asset can be expected to generate during its remaining life. This approach is based on a forecast of the business income and expenses that the property will generate over a given period of time. It assumes that the value of the property is dependent on the ability of all the assets to earn a reasonable return. This approach is best utilized for determining the business enterprise value.
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