- 20 - the property, the term of the lease, the market rate of rent for similar properties, and any risk factors that could affect receipt of payments. A patent is an exclusive right to make, use, and sell a patented item. As in the case of a leasehold, the payment stream available to the holder of a patent is valued by quantifying a variety of factors to reach an appropriate discount or capitalization rate. Such elements include the age of the patent, its economic and legal life, the income it generates, the products with which the underlying item competes, the risks of the relevant industry, and the status of the economy. A royalty is the income received from another for the other’s use of property, and the term is usually employed in reference to mineral rights, copyrighted works, trademarks, and franchise interests. The value of a right to royalty payments is again based upon the particular characteristics and risks associated with the payment stream, taking into account the annual income produced, the length of the agreement’s term, the payment history, the possibility of sales or volume reduction with respect to the underlying asset, any pertinent governmental and industrial restrictions, and the nature of the underlying asset (including the quantity and quality of reserves for mineral and oil interests).Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
Last modified: May 25, 2011