Posted in Finance, Accounting and Economics Terms, Total Reads: 249
Definition: Contributory Value
As the name suggests, it refers to the value of a component with respect to the total value. It finds application in real estate to explain the contributory value of a feature in a property to the total value of the property.
For example, the contributory value of state of the art furniture is INR 1 lac for a 50 lac property. Consequently, the property would be valued at INR 49 lac without the furniture. Worth noting is that a single feature could have varying contributory values. This is because the contributory value is dependent on buyer preferences as well as the state of economy.
The contributory value of a swimming pool would be INR 10 lac for a family with teenage children, but drastically lower value for an elderly couple.