5.2 Application of the Income Approach The Single Period Capitalization Method has been selected to implement the Income Approach. This method is based on the concept that today’s value can be derived from a stabilized income (or earnings or cash flow stream) that is capitalized by an appropriate capitalization rate to reflect the risk associated with the chosen income stream in terms of achieving the growth rate assumed as well as the absolute level of earnings. This can simply be presented in the following formula
