Which method of yield capitalization uses published financial tables to simplify the discounting process?

The method of yield capitalization that uses published financial tables to simplify the discounting process is annuity capitalization. This approach is particularly useful because it allows appraisers and investors to determine the present value of a series of equal cash flows received at regular intervals over a specified period. By using published annuity tables, one can easily find the present value factor that corresponds to the interest rate and the number of periods involved. This significantly simplifies the calculations involved, especially compared to manually discounting each individual cash flow.

For instance, in valuing an investment property that generates consistent rental income, an annuity capitalization method can give a quick and effective way to ascertain its value by applying these tables based on the expected rental income and the required rate of return. This ease of use is what makes this method distinct in the realm of yield capitalization techniques.

Other methods, such as direct capitalization, discounted cash flow analysis, and residual land capitalization, do not rely on published tables in the same way. While they are certainly effective approaches in appraisal practice, they typically involve more complex calculations, particularly with varying cash flows or different investment periods, which may not be as straightforward as utilizing annuity tables for consistent cash flows.