ABSTRACT
The income approach in its two formats, capitalisation (Chapter 10) and discounted cash flow (DCF) (Chapter 11), requires an understanding of investment mathematics. This chapter looks at the basic investment tools: first those that deal with compound interest or compounding and second those that deal with discounting. These tools are sometimes described as the six functions of £1 and are used in valuation and for other financial tasks that a valuer might have to undertake.
