Types of Appraisals

What are the types of machinery and equipment appraisals?

Fair Market Value (FMV):

The price at which a piece of machinery or equipment would change hands between a willing buyer and a willing seller, with both parties having reasonable knowledge of the relevant facts and no compulsion to buy or sell.

Orderly Liquidation Value (OLV):

The estimated value of machinery and equipment when sold over a reasonable period, allowing for an orderly sale to achieve the best possible price in the prevailing market conditions.

Forced Liquidation Value (FLV):

The estimated value of machinery and equipment when sold in a forced or expedited manner, often under compulsion or time constraints, resulting in a potentially lower value compared to orderly liquidation.

Insurance Replacement Cost (IRC):

The cost to replace machinery or equipment with a new one of similar kind and quality, considering current market prices for materials, labor, and other relevant factors. This is often used in insurance appraisals.

Insurance Actual Cash Value (ACV):

The actual cash value of machinery or equipment at a specific time, calculated by subtracting depreciation from the replacement cost. This is used in insurance settlements.

Net Present Value (NPV):

A financial metric that represents the difference between the present value of cash inflows and outflows over a period of time. While not a traditional appraisal type, NPV is used in investment analysis for machinery or equipment acquisitions.

Income Approach:

A valuation method that assesses the value of machinery or equipment based on its expected future income. This approach is commonly used for assets that generate income, and it considers factors like cash flow, risk, and discount rates.

Salvage/Scrap Value:

The estimated value of machinery or equipment at the end of its useful life when it is no longer economically viable for its intended purpose. Salvage or scrap value represents the residual worth of the asset's materials.

Each of these appraisal types serves a specific purpose and is applied in different contexts depending on the circumstances, industry standards, and the goals of the appraisal process. It's important to choose the appropriate valuation method based on the specific needs of the situation.

Contact Corvus machinery and Equipment Appraisal to determine correct appraisal type for your needs.

Based in Easton, Pennsylvania and providing local appraisals in PA, NY, NJ and the surrounding regions.