SSC JE Civil Engineering 23-Mar-2021 Shift 1 Paper

Concept:
Valuation:
It is the technique of estimation or determining the fair price or value of the property such as building, a factory, other engineering structures of various types, land, etc. By valuation, the present value of a property is defined.
Rental Method of Valuation:
The capitalized value of the property is worked out as under:
Net Rent = Gross Rent - Outgoings
Capitalized Value = Net Rent × Year's Purchase
Year's Purchase(YP):
It is defined as the capital sum required to be invested in order to receive an annuity of Re 1.00 at a certain rate of interest.
YP=

1

(i+S)

or

1

(i)

Where i = rate of interest, and S = Sinking fund coefficient
Calculation:
Gross Rent = 1,000 per month
Gross Rent = 1000 × 12 = 12000 per year
Outgoings = 20% of the gross rent = 12000 × 0.20 = 2400
Net Rent = Gross Rent - Outgoings = 12000 - 2400 = 9600
Year's Purchase(YP)
i = 10%
YP=

1

(i+S)

or

1

(i)

=

1

0.10

=10
Capitalized Value = Net Rent × Year's Purchase = 9600 × 10 = 96000
Capitalized Value = Rs 96,000