PROFIT METHOD

Estimated Annual Income/Sales A

Less (-)

Cost to purchase per annum B

Less (-)

Annual Gross Profit (A-B)

Less (-)

Annual Working Expenses C

Annual Net Profit/Divisible Income (per annum) (A-B)-C

Less (-)

a) Interest On Capital D

b) Entrepreneur’s profit/Operator’s E
profit/Tenant’s share

Balance/Available for rent (Gross Annual Rent) (A-B)-C-(D+E)

Less (-)

Annual expenses/outgoings F

Net Annual Rent (A-B)-C-(D+E)-F

Multiply (x)

Year’s Purchase YP

CAPITAL VALUE {[(A-B)-C-(D+E)]-F} YP