Cost Approach
valuation_cost_approachCost approach: depreciated reproduction cost from a cost breakdown and depreciated replacement cost with equivalent utility, both reduced by obsolescence. Method selects the formula. Use when no income or market evidence exists, or to corroborate income and market indications for internally developed intangibles. For income-based indications use valuation_income_methods; for market evidence use valuation_market_approach. Per method: reproduction_cost needs development_costs (optional: obsolescence_factors); replacement_cost needs current_cost (optional: obsolescence_factors). obsolescence_factors values are decimals that are summed and applied to the cost base; omit them for no obsolescence. Only method is required; other parameters are method-dependent, so supply those named for the selected method and omit the rest (documented defaults apply where defined). Pure arithmetic: no I/O and no external calls, and numeric results are returned rounded to 2 decimals. Parameters belonging to other methods of this tool are accepted and ignored. Supplying an unknown method, or leaving unset a parameter that the chosen method requires, returns an error instead of a value.
Input Schema
| Name | Required | Description | Default |
|---|---|---|---|
| method | Yes | Formula to apply. Options: reproduction_cost = Sum of cost categories less total obsolescence.; replacement_cost = Current cost of equivalent utility less obsolescence. | |
| current_cost | No | Current cost to replace the asset with equivalent utility, in currency units. | |
| development_costs | No | Cost breakdown by category, e.g. {"r_and_d": 1000000, "testing": 250000}, in currency units. | |
| obsolescence_factors | No | Obsolescence factors, e.g. {"functional": 0.10, "technological": 0.15, "economic": 0.05}. |
Output Schema
| Name | Required | Description | Default |
|---|---|---|---|
| error | No | Error message when the call fails. | |
| steps | No | Intermediate calculation steps for traceability (one string per step). | |
| value | Yes | Computed valuation, rate, or metric. | |
| method | No | Formula / method name that produced the result. | |
| assumptions | No | Modelling assumptions applied (list of strings or key/value object). | |
| formula_reference | No | Mathematical formula or reference applied. |