If an investor anticipates an annual rental income from a leased property to be $400,000 dollars, this expected sum has a direct bearing on what the investor will pay for the property. This is an example of

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Business

Nathen Nunez

23 November, 20:15

If an investor anticipates an annual rental income from a leased property to be $400,000 dollars, this expected sum has a direct bearing on what the investor will pay for the property. This is an example of

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Derick Blackburn · Answer 1

Principle of anticipation

Explanation:

The principle of anticipation is a way to measure or calculate the value of a property. According to this rule the value of a property depends on the anticipated or expected income or cash flows the property can generate in the future. The higher the anticipated or expected income or cash flow the higher the value of the property will be. For example if a commercial building has a anticipated income of rent of $100,000 and the another building has an anticipated income of rent of $200,000, the building with the higher anticipated income will have a higher price if all other things are equal. In this case the anticipated annual rental income has a direct bearing on what the investor will pay for the property. So this is an example of the principle of anticipation.