MICRO-PROJECT REPORT ON

“ Prepare a report on computation of capitalized value”

2023-2024

This Micro-Project Work Submitted In Partial Fulfillment of Requirement

for the Award of Diploma In
CIVIL ENGINEERING
Under The Guidance Of
Mr. N.A.Bhange Sir
(Lecturer in Civil Engineering)

SUBMITTED BY
Name of Students Roll No Enrollment No.
Jayash G. Chavhan 46 2201210384

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 GOVERNMENT POLYTECHNIC, BRAMHAPUR
IDIST-CHANDRAPUR
DEPARTMENT OF CIVIL ENGINEERING

Certificate
This is to certify that the following students of this institute have carried out this
project work on “Prepare a report on computation of capitalized value” under the
guidance of Mr.N.A.Bhange sir lecturer in Civil Engineering during the session
2023-2024. This work has been done in the partial fulfillment of the award for
Diploma in Civil Engineering from Maharashtra State Board of Technical Education,
Mumbai.

SUBMITTED BY:-
Jayash Ganesh Chavhan (46)

Mr. N.A.Bhange Sir Miss. M.T.Nagdev Mam

(HOD)
Project Guide Civil Engg. Department
(Lecturer in Civil Engineering)

Dr.R.L.Wankhede Sir
(PRINCIPAL )
(Principal of Govt poly.Bramhapuri)

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 GOVERNMENT POLYTECHNIC,BRAMHAPURI DIST-
CHANDRAPUR
DEPARTMENT OF CIVIL ENGINEERING

SUBMISSION

We are students of Third year of Department of civil engineering ,humbly

completed this Micro-project work for time to time as described in this report
by my own skill and study between the period from 2023-24. A per instruction
and guidance of Mr. N.A.Bhange Sir and following students was associated for
this work. However, quantum of my contribution has been approved by the
guide.

SUBMITTED BY:-

Name of Students Roll No. Date

Jayash G. Chavhan 46 / /2024

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 GOVERNMENTPOLYTECHNIC,BRAMHAPURI
DIST-CHANDRAPUR

ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my teacher Mr. N.A.Bhange

Sir who gave me an opportunity to do this project and also provided support in
completing in project. I would also like to extend my gratitude to our Head
Department Miss. M.T.Nagdeve Mam for providing me with all the facilities that
were required. .

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 INDEX
Sr. Contents Page.No
No
1. Introduction 6

2.
Proposal Part-A

1. Aim of Project 7
2. Course outcomes
3. Proposed Methodology to
4.Action Plan
5.Resources Required 8
6.Name of team members

3.
Proposal part-B

1.Aim of Micro-Project
2.Rationale 9
3. Course Outcomes
10 -16
4. Literature Review
5.Actual Methodology followed
6.Actual Resources Used
7.Output of the Micro-project 17-18
8.Skilled development
9.Application of the Micro-project
10.Conclusion
11.Evaluation sheet. 19

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 INTRODUCTION

➢ Capitalized value and Computation of capitalized value

• DEFINITION

Amount of money whose annual interest at highest prevailing rate of interest, commensurate with
the type of property under reference, will be equal to the net income arising from such property is called
as capitalized value.

Capitalized value is the amount needed to be paid to obtain a periodic payment in the form of net return
in perpetuity.

• SOME IMPORTANT TERMS

1. Gross rent or Gross income: It is the total income of the property from various resources. Usually
it is calculated per annum. The outgoings and operational and collection charges are not deducted.

2. Net income/Net rent/Net returns: This is the amount left after deducting all outgoings, operation
and collection charges from the Gross income (total receipts).

Net income = Gross income – Outgoings

The owner of the property expects a certain percentage of return on his investment. The return
expected depends upon life of property and risk involved in the property.

Net income = Capital cost x Rate of return

3. Outgoings: There are expenses required to be incurred to maintain the property. These includes
municipal taxes, Management charges, Annual repair, Sinking Fund, Insurance, loss of rent, Income
tax, Miscellaneous expenditure.

4. Year’s Purchase: Year’s Purchase can be defined as the Capital amount which is required to be
invested in order to get an annual income of Rupees One at certain rate of interest.

Capitalized value = Net Income x Years purchase

Years purchase Capitalized value /Net income

Y.P. = 100 / rate of interest = 100/i

Where , i = rate of interest in decimal

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 PART–A

“ Prepare a report on computation of capitalized value”

1.0 Aims of Micro-project

• “ Prepare a report on computation of capitalized value”.

2.0 Course Outcomes

• Prepare the detailed specification for various items of construction.

3.0 Proposed Methodology

1) We have discussed the topic among the team member.

2) We have prepared proposal of micro-project.

3) We have prepared report as per guidance of subject teacher.

4) To prepare project report and submit.

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 4.0ActionPlan

Sr. Details of Activity Planned Planned Responsible members

No Finish Date (Roll no.)
Start
Date

1. Discussed about the topic

with group members
2. Collection information
about project
3. Editing information about Jayash G.Chavhan
project
4. Prepared proposal 46

5. Submission of
microproject

5.0ResourcesRequired

Sr. No Name of material Specification Qty

1. Laptop Sony -

2. Books Estimating and costing (Birdie,G.S) 01

3. Internet As per required

https://gem.gov.in

6.0
Name of Student Roll No.

Jayash G. Chavhan 46

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 PART –B
“ Prepare a report on computation of capitalized value”

1.0 Aims of Micro-Project

• “ Prepare a report on computation of capitalized value”.

2.0 Rationale
For infrastructure development various construction projects are required to be undertaken.
These projects are to be executed by entering into a legal contract. The diploma student shall
have adequate knowledge of different types of contract and accounting procedures of
organization about the projects are to be executed by entering in to legal contract. The
procedure of execution of work by various organizations will be useful while working as an
engineer in organization to execute various works. Concept of Tender and knowledge about
preparation of tender documents, writing specification for different items of work will be
helpful to prepare actual Tender papers and contract documents which are required before
execution of construction. The information on procedures and different types of forms used
by department will be useful to prepare bills and different modes of payment to contractors.
This Course will help the student in implementing actual field practices, which will make
student further more competent in the execution of civil engineering works.

3.0 Course Outcomes

• Determine the capitalized value of given building/quarter as per PWD methods.

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 Literature review

➢ Data required to Compute Capitalized Value

Following data is needed to compute the capitalized value :

1 The net income from the property after deducting all the outgoings from the gross income is required
to compute the capitalized value.

Net income (Gross income-Outgoings)

2. The highest prevailing rate of interest for investment in such type of property is also required the rate
of capitalization depends upon the following data:

1. Ease of liquidity of the asset.

2. Divisibility of holding.

3. Presence of rent review clause.

4. Ease of management and transfer.

5. Likelihood of capital gains.

6. Use of property (for commercial/Residential)

7. Security of capital

8. Presence of legal hazards.

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 ➢ Numerical

Ex. 1. Calculate the capital value of a property from following data :

i. Rent inclusive of all taxes = Rs. 400/- month.
ii. Outgoings 20% of gross rent.
iii. Net yield expected from property = 6%.

Soln. :

Step 1: To find Y.P.

Years Purchase (Y.P.) = 100 / Rate of interest =100 /6 = 16.67

Step 2: To find total outgoing

Total outgoings = 20% of gross income

= 20 /100 × 400 = 80

Step 3: To find net monthly income

Net monthly income = Gross income outgoings

= 400-80
= 320

Step 4: To find net annual income

Net annual income = 12 x 320=3840/-

Step 5: To find capitalized value

Capitalized value = Net annual income x Y.P.

= 3840 x 16.67
= 64012.8 ~ 64,000/-
Capitalized value = 64,000/-

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 Ex. 2.A building is constructed in 1973 fetches a rent of Rs. 12000 per year. The life of building is
estimated to be 80 years. The investment at 8% security and allowing redemption capital at 5%.
Calculate the capitalized value of the property if outgoings are 30% of rent.

Soln. :

Given:

Rent of Rs. 12000/year;

Life of building = 80 years;
Security investment = 8%;
Redemption capital = 5%;
Outgoings = 30% of rent;
Capitalized value to be determined

Step 1: To find net rent

Gross rent = Rs. 12000 per annum

Amount of outgoings = 0.30 × 12000 = Rs. 3600/-

Net rent = 12000-3600= Rs. 8400

The investment at 8% security and allowing redemption capital at 5%.

Step 2: To find present value

Present value required = 1 / i + s

= 1 = 12.35
0.08 + 0.05
(1 + 0.05 )80 − 1

Step 3: To find capitalized value of property

Value of property = 8400 x 12.35 = 103740/-

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 Ex.3. A property fetches a monthly rent of Rs. 1200. The out going are as below sinking fund
installment = Rs. 800/ annum repairs = Rs. 1200, other outgoings = 15% of gross income calculate the
capitalized value of property if rate of interest is 9% .

Soln.:

Step 1: To find years purchase (Y.P.)

Capitalized value = Net income x Y. P.
Net income = Total income – outgoing
=(1200 x 12) - [900+1200+{15/100}(1200 x 12)]
= 10,140
Y.P.= 1/i = 1/0.09 =11.11
Step 2: To find capitalized value
Capitalized value= 10,140 × 11.11 = 112655.4 ~ 112660

Ex .4. Find out the capitalized value of a property fetching a net annual income by way of rent as Rs.
12,000/- when the highest rate of interest prevalent is 8%.

Soln. :

Given:

Net annual income 12,000/-

Highest rate of interest = 8%

Step 1: To find Y.P.

Years Purchase (Y.P.) = 100 / Rate of interest = 100 / 8 = = 12.5

Step 2: To find capitalized value

Capitalized Value = Net annual income x Y.P.

= 12,000 x 12.5 = 1,50,000

Capitalized Value = 1,50,000.

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 Ex.5. A person desires to sell his property having following data:
Gross rent = 2500/month
Outgoings = 30% of G.R.
Future life = 35 years
Estimated value of Land = Rs. 2 Lakhs
Determine fair value of the property if the rate of interest is 10%.

Soln. :

Given:
Gross rent= Rs. 0.25 /month
Outgoings= 30% of Gross rent
Future life = 35 years
Estimated value of land = Rs. 2 Lakhs rate of interest 10%

Step 1: To find capitalized value

Capitalized value = Net income x Y.P

Net income=Total income-Outgoing

= (2500 x 12) – 30/100 (2500 x 12)
= 30000 – 9000 = 21000

Y. P = 1/(i + s)
i = 10/100 = 0.1
S = 0.1/((1 + 0.1)35 – 1) = 0.00369
Y. P = 1/(i + s) = 1/(0.1 + 0.00369)

Capitalized value= Net income x Y.P

= 29000 x 9.64 = 2 ,02,440

Step 2: To find fair value of the property

Fair value = Capitalized value + Cost of land

=2,02, 440 + 200000
= 4 ,02,440/-

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 Ex.6. A property fetches a monthly rent of₹ 6000/-. The outgoings including sinking fund are up to 25%
of gross income. If the rate of interest of 12 % p.a, calculate, years purchase and capitalized value.

Soln. :
Monthly rent is Rs. 6000/-
Therefore gross annual income,
= 12 x 6000 72000/-
Outgoings = 25/100 x 72000 = 18000
Gross income = Net income + outgoings
72000 = Net income + 18000
Net income = 54000/-

Year purchase = 100/12 = 8.33

Capitalized value = Net income x Years purchase
= 54000 x 8.33
= 450000/-

Ex.7. Find the value of a property consisting of land and building from the following data. Rent
inclusive of all taxes Rs 4000 per month, outgoings 20% of gross rent. Net yield expected from the
property 6%, future life of building 50 years .

Soln. :

Monthly rent = 4000

Gross rent /income per annum =12 x 4000 = 48000
Outgoings = 20% of gross rent.
= (20/100) x 48000
= 9600

Net income = Annual gross income – outgoings

= 48000-9600
= 38400

Years purchase = 1/n = 1/0.06 = 16.66

Capitalized value = Net income x Years purchase

= 38400 x 16.66
= 639744
Capitalized value = 640000/-

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 Ex.8. A property gives monthly rent of Rs. 4000.
i. The outgoings are :Sinking fund installment = Rs. 1000
per annum.
ii. Repairs cost = Rs. 10000/-
iii. Other outgoings =20% of gross income
iv. Calculate capitalized value if rate of interest of bank is
9%.

Soln. :

Monthly rent Rs. 4000

Annual income from rent = Rs. 48000/-
Net income Gross income outgoings

Outgoings are :
Sinking fund installment Rs. 1000 per annum
Repairs cost = Rs. 10000/-
Other outgoings = 20% of gross income

Net income =48000-1000-10000 -0.2 × 48000

= Rs. 27,400/-

Y.P. =1/i
=1/0.09
= 11.11

Capitalized value = Y.P. x Net annual income

=11.11x2740
=Rs.3,04,414/.

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 4.0 Actual Methodology Followed

1) We have discussed the topic among the team member.

2) We have prepared proposal of micro-project.
3) We have prepared report as per guidance of subject teacher.

5.0 Actual Resources Used

Sr. No Name of material Specification Qty

1. Laptop Sony -

2. Books Estimating and costing (Birdie,G.S) 01

3. Internet As per required

https://gem.gov.in

6.0 Outputs of this Micro-Project

• “Determine the capitalized value of given building/quarter as per PWD methods.”.

7.0 Skill Developed

• To know information about capitalized value.

8.0 Application of this Micro-Project

• Overall, capitalized value is a versatile valuation method used across various

industries to assess the worth of income-generating assets and businesses based on
their expected future earnings..

9.0 Conclusion

In finance, capitalized value typically refers to the present value of an asset’s future income streams,
often used in valuation methods like the income approach. The conclusion drawn from calculating
capitalized value would depend on the specific context, such as determining the worth of an
investment, company, or asset.

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 1. References
https://thecivil.org

https://www.sciencedirect.com/topics/materials-science/elastic-constant

https://theconstructor.org/structural-engg/solid-mechanics/elastic-constants-
relationships/34392/?amp=1

https://www.educationalstuffs.in/elastic-constants/

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 Evaluation Sheet

Name of Student :- Jayash Ganesh Chavhan

Enrollment No :- 2101210384 Roll No. :- 46

Name of Program :- Civil Engineering Semester :- sixth

Course Title : Contracts and Accounts Code:- 22601

Title of the Micro project :-“ Prepare the report on computation of capitalized value”.

Sr.no. Characteristics to be Poor Average Good Excellent Sub

assessed (marks 1-3) (marks 4-5) (marks 6-8) (marks total
9-10)
1. Relevance to the
course
2. Literature
Review / Information
collection

3. Completion of the
target as per project
proposal
4. Analysis of data and
representation
5. Quality of
prototype /
model
6. Report preparation

7. presentation
8. viva
.

Process and product Individual presentation /viva Total (10 marks)

assessment (6 marks) ( 4 marks)

Comments / Suggestion about team work / Inter-personal communication

Name and designation of the teacher :- Mr. N. A. Bhange Sir

Dated Signature:- / / 2024

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