
260 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
three general approaches under which each of the methods fall. Table13.2
summarizes the three accepted methods.
We will discuss each of these approaches in the subsequent paragraphs.
13.5.1 Income Approach
This determines the value based on how much the business is forecasted
to earn in the future. This approach is based on the theory that fair mar-
ket value is the present value of all future benets. Fair market value is the
amount at which the property would change hands between a willing buyer
and a willing seller, when the buyer is not under compulsion to buy and ...