A VALUATION REPORT ON

AN INDUSTRIAL ATTACHMENT WITH

INTECON PARTNERSHIP LTD,
OLD BODIJAH, IBADAN

PREPARED BY:

MUSTAFA TEMITOPE OLADEPO

CVE/2015/047

DURATION:

SIX MONTHS

DEPARTMENT OF CIVIL ENGINEERING,

FACULTY OF TECHNOLOGY,

OBAFEMI AWOLOWO UNIVERSITY, ILE-IFE

15 March 2020
 Department of Civil Engineering,
Obafemi Awolowo University,
Ile-Ife, Osun State.

15 March 2020.

The Coordinator,
CVE 400 – SIWES II,
Department of Civil Engineering,
Obafemi Awolowo University,
Ile-Ife, Osun State.

Dear Sir,

LETTER OF TRANSMITTAL

This valuation report was written as part of the requirements for CVE400 – Student

Industrial Work Experience Scheme II.

I have tried my best to complete the report concerning the desired requirements. Kindly

accept this humble effort of bringing forward this report.

Yours faithfully,

OLADEPO Mustafa Temitope.

CVE/2015/047

ii
 ACKNOWLEDGEMENT

I would like to acknowledge with sincere appreciation, the contributions of my parents,

Engr. Folawuyo, Engr. Kemi, Mr Bankole, Mr Tunji, Engr. Teslim, Engr. Oke, Engr.

Atilade, and the entire staff of INTECON Partnership Ltd, for their contributions to

making this internship a success.

iii
 ABSTRACT

I was attached with INTECON Partnership Ltd for my six-month industrial training.

INTECON Partnership Ltd is a civil engineering consultancy firm majoring in highway,

structural, geotechnical and environmental engineering.

In order to carry out the valuation of the assets owned by INTECON Partnership Ltd.;

the declining balance method was used. All items were listed in a table and the summary

of the valuation analysis was tabulated.

At the end of the valuation, an approximate amount of nineteen million and forty-two

thousand, eight hundred and twenty-two naira (₦19,042,822) was estimated as the

current value of the company.

iv
 TABLE OF CONTENTS

LETTER OF TRANSMITTAL ii

ACKNOWLEDGEMENT iii

ABSTRACT iv

TABLE OF CONTENTS v

LIST OF FIGURES viii

LIST OF TABLES ix

CHAPTER ONE: INTRODUCTION 1

1.1 Company Profile 1

1.1.1 Organizational structure 2

1.1.2 Services 3

1.1.3 Facilities and infrastructures 5

1.2 Objective of the Study 5

CHAPTER TWO: LITERATURE REVIEW 9

2.1 Introduction to Engineering Valuation 9

2.2 Methods of Engineering Valuation 11

2.2.1 Replacement cost method 11

2.2.2 Depreciated replacement cost method 11

2.2.3 Open market valuation or disposal method 12

2.3 Method of Valuation Specific to the Company 12

2.4 Present Method in Practice in the Company 12

v
 2.5 Depreciation 12

2.5.1 The straight-line method 14

2.5.2 The declining balance method 14

CHAPTER THREE: METHODOLOGY 16

3.1 List of Engineering Equipment Asset to be Evaluated 16

3.2 The Procurement History and Costs 16

3.3 Valuation Analysis 16

3.3.1 Valuation computation for 12kW, 415V 3-Phase Generator 21

3.3.2 Valuation computation for hilux truck 21

3.3.3 Valuation computation for air conditioning system 21

3.3.4 Valuation computation for switch over box 22

3.3.5 Valuation computation for computer systems 22

3.3.6 Valuation computation for socket outlets 22

3.3.7 Valuation computation for routers 23

3.3.8 Valuation computation for uninterrupted power supply 23

3.3.9 Valuation computation for network cables 23

3.3.10 Valuation computation for office cabinet 24

3.3.11 Valuation computation for louvre plates and fittings 24

3.3.12 Valuation computation for fluorescent engine 24

3.3.13 Valuation computation for Autodesk design suite 25

3.3.14 Valuation computation for profoscope 25

vi
 3.3.15 Valuation computation for switch boxes 25

3.3.16 Valuation computation for total station 26

3.3.17 Valuation computation for concrete tester and surveyor 26

3.3.18 Valuation computation for ultrasonic thickness gauge 26

3.3.19 Valuation computation for mayhew 200 drilling rig 27

3.3.20 Valuation computation for LaserJet printers 27

CHAPTER FOUR: RESULTS AND DISCUSSION 28

CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS 31

5.1 Conclusion 31

5.2 Recommendation 31

REFERENCES 32

vii
 LIST OF FIGURES

Figure 1.1: Organizational structure 4

viii
 LIST OF TABLES

Table 1.1: Facilities available in IP (cont’d) 6

Table 3.1: List of company assets to be valued (cont'd) 17

Table 3.2: Procurement history of assets to be valued (cont’d) 19

Table 4.1: Analysis results (cont'd) 29

ix
 CHAPTER ONE

1INTRODUCTION

1.1 Company Profile

Intecon Partnership Limited is an ISO 9001: 2015 certified company located in

#16 Aperin street off Awolowo Avenue, Old Boija, Ibadan, Oyo state.

Intecon Partnership Limited is a leading firm of Nigerian Consulting Engineers

specializing in areas of heavy industrial and large scale civil engineering works

such as high-rise buildings, factories, stadia, highways and bridges, airstrips and

hangers, helicopter bases, ports, jetties, oil terminals and housing estate.

Established in 1976, the firm has been operating for over 40 years and is credited

with many completed projects within the length and breadth of Nigeria and

along the West African Coast. INTECON’s clientele includes operators in the

Oil and Gas Industry, Federal and State Governments, Infrastructure

Companies, Aviation and Private Institutions.

Apart from its extensive consulting engineering capabilities, Intecon

Partnership Ltd is the parent company of two other specialist companies viz:

Automated Geotechnics Ltd and Interworks Engineering Ltd.

Automated Geotechnics was established in the year 1997 in response to the

dearth of competent local Geotechnical Engineering Companies equipped with

modern facilities at the time. Thus, the philosophy behind its formation is to

digitally ‘automate’ its operations from the field to the laboratory. Hence, it is

equipped with such State-of-the-Art equipment, such as 20Tons Pagani CPT

equipment; New Humboldt Automated Triaxial Testing Machine; Automated

Sieve Analyses equipment etc.

1
 Interworks Engineering was established in 1997, as well, to execute the

Procurement and Construction of projects engineered by Intecon Partnership

Ltd. or other entities. It has completed the execution of several projects for the

Oil & Gas Industry, Multinational Clients as well as Academic and Government

Institutions across the country.

1.1.1 Organizational structure

The organization consists of four (4) departments which are listed below:

• Project Team Department

o Project Team Highways/Infrastructures

o Project Team Structures/Bridges

o Project Team Construction Supervision

• Business Development / Quality Management Department

• Finance Department

• Administration Department

The project team department is responsible for executing engineering projects.

The department comprises of veteran civil engineers in all four major branches

(Structures, Highway, Environmental and Geotechnics) who are all COREN

certified.

The business development/quality management department is responsible for

preparing, formatting and printing engineering reports and other documents,

bidding for new projects and maintaining the standard of the company. The

department also comprises of COREN certified engineers.

2
 The finance and administration departments also comprise of qualified

personnel working together to maintain the standard of the company. The

structure of the organization is summarized in Figure 1.1.

1.1.2 Services

Over the years, Intecon Partnership (IP) has been known to deliver world-class

engineering services on projects. They have achieved the production of durable

facilities and time-tested solutions at optimum costs to clients, and in a timely

and environmentally friendly manner, utilizing highly trained manpower,

cutting-edge technology and equipment.

The services they provide are listed below:

• Detailed engineering design services covering:

o Highways/bridges;

o Onshore & offshore/marine structures;

o Buildings;

o Industrial Parks;

o Environmental engineering studies;

o Remediation etc.

• Geotechnical investigations

• Engineering surveys

• Structural integrity checks/non-destructive testing

• Project supervision – quality/cost engineering

• Third-party certification

• Project management services

• QA/QC inspection services/provision of technical personnel

3
Figure 1.1: Organizational structure

4
1.1.3 Facilities and infrastructures

Intecon’s design office is completely digitalized employing both in-house

developed as well as world-class proprietary software. The company is also

equipped with sophisticated hardware, printers and field equipment. The

summary of their facilities is tabulated in Table 1.1.

1.2 Objective of the Study

The objective of this report is to determine the current market value of the assets

owned by Intecon Partnership Ltd. And to also provide a useful record that can

help in decision making for future company requirement and familiarization

with the art of engineering valuation.

5
Table 1.1: Facilities available in IP (cont’d)

Facility Group Description

1 No HP Printer A0, A1 and A2 printer
DesignJet 500
plus
1 No. HP 1620 Printer A4 printer
LaserJet
4 Nos Computer Hardware Pentium IV 2.0GHz process and Intel
Notebooks Core i3 processor
7 Nos Hardware Ms XP Intel Pentium R, quad-core
Workstations CPU 2.40GHz, 480MB Ram, 80GB
HDD with 17" TFT screen monitor
Ansys/Abaqus Software For structural analysis

Application Hardware 500GB SATA control storage, loaded

Server with Microsoft windows seven, for
publishing Engineering software and
other MS-Office Application

AQWA Software For hydrodynamics

Autodesk Design Software For building and infrastructural design

Suite
Autopipe Software For piping analysis

CAD RC Software For detailing structural concrete

CFX/Fluent/Star Software For fluids and thermal

CCM+
Civil 3D Software For surveys and highways

Computerized Geotechnical For carrying out cone penetration tests

20T Pagani TG Engineering
73 200KN for Equipment
static CPT,
Dynamic CPT,
Seismic Cone
Penetration Test

CTS-02V4 NDT For confirming the integrity of concrete

Concrete Tester Equipment structures
and Surveyor

6
Table 1.1: Facilities available in IP (cont’d)

Facility Group Description

File Server Hardware 1 Terabyte hard drive; 8GB RAM
running Microsoft Windows server
2008
FINGLOW Software For pressure vessels

FLACS Software For fire & blast

Flareism & Software For flares and dispersion

PHAST
Hole Base Software For geotechnical work

Land Software For highway design

Development
Mayhew 1500 Geotechnical Capable for up and down drilling
Drilling Rig Engineering operations
Equipment
Mayhew 200 Geotechnical Capable for up and down drilling
Rotary Drilling Engineering operations
Rig with Equipment
Accessories

Microsoft Office Software For documentation, spreadsheet, and

scheduling
New Humboldt Geotechnical Triaxial testing equipment for soil
Triaxial Machine Engineering
with UU and CU Equipment
capability

OLGA Software For flow assurance

ORACLEFLEX Software For installation and risers

Profoscope NDT For measuring the diameter of

Equipment reinforcement and thickness of
concrete cover to reinforcement
Proxy Server Hardware A dedicated CPU, designated for
internet network access with security
firewall and administrator control
SACS/SESAM Software For structural assessment

SCALE Software For design

7
Table 1.1: Facilities available in IP (cont’d)

Facility Group Description

Several HP Color Printer A3, A4 printers
LaserJet
Several HP Printer Wide-format A3 printers
Officejet 7000
Several HP Printer A4 printers
Officejet J4580
series
Several Hardware HP Pentium R, dual-core CPU E5800
Workstations @ 3.20GHz
STAAD Pro Software For analysis and design

Super Stress Software For analysis

Total Station Engineering Survey equipment used along with

Survey Civil 3D
Equipment
Ultrasonic NDT For measuring steel thickness
Thickness Gauge Equipment

8
 CHAPTER TWO

2 LITERATURE REVIEW

2.1 Introduction to Engineering Valuation

Engineering Valuation is a branch of engineering that deals with the

determination of the present value of engineering equipment and machinery for

disposal or other purposes. It is the application of engineering or mathematical

analysis and synthesis to making economic decisions. Machinery and

equipment are an important part of an asset-intensive business. Knowing how

much the machinery and equipment are worth will determine the amount of

goodwill that consumers are paying for as part of the overall purchase price.

Having in mind that values can differ depending upon specific circumstances.

According to Richmond (1994), Surveyors will be employed whenever

activities involve land, construction or property. They may be members of the

Royal Institution of Chartered Surveyors and/or the Incorporated Society of

Valuers and Auctioneers. Also, according to Massari et al (2016), To evaluate

an enterprise or an acquisition, an analyst does not depend on the quantity of

the previous valuations carried-out but the quality of work done.

The economic decisions you will be expected to take in the valuation of an asset

may not necessarily be to determine costs or go for the cheapest alternative, but

to base the economic decisions on the totality of the asset being valued in time

and space in one hand and usage on the other hand. In which case, the valuer

would take a look at the reason for valuation and select the best of possible

options/routes in arriving at the cost of an asset.

9
Two good uses for Engineering Valuation are:

1. Financial Purpose: The financial purposes usually include the need for

budgeting and estimating profits in a company or holding/establishment for

tax and/or record purposes (for processing a loan for instance) and valuating

an asset for disposal purpose. Without a proper appraisal of the value of each

equipment or asset, great financial loss may be brought to a client. Where a

valuation is being prepared for tax purposes or to report to shareholders,

there is the need for Cost Segregation Studies (CSS) a new branch of

valuation.

2. Insurance Purpose: This is the valuation usually commissioned by an

Insurance broker firm or even an individual to know the worth of an asset

intended to be insured. There are many reasons for insuring an asset. An

equipment or vehicle may be insured against theft or damage. The type of

insurance is usually comprehensive and this is traditionally 10% of the PW

value of the asset. The method of valuation for this is the Replacement Cost

method.

According to Blackledge (2009), property valuers have to possess and be

competent in a diverse range of skills such as:

1. Research models

2. Calculation

3. Measurement

4. Report writing

5. Negotiation

10
 6. Management and business finance

7. Working knowledge of economics and politics

8. Knowledge of building construction

9. An awareness of environmental issues

2.2 Methods of Engineering Valuation

2.2.1 Replacement cost method

The valuation for insurance purpose involves the establishment of the current

cost of replacing the asset as new. If the asset is imported the replacement cost

is estimated from the sum of the current ex-works price, the freight cost, and

cost of transit insurance, port charges, customs charges, clearing agent charge,

transportation charges and installation charges. The valuer needs to know the

current exchange rate and government charges for the imported machinery.

2.2.2 Depreciated replacement cost method

This involves a two-stage operation of first estimating the equipment as new

and then depreciating the value obtained to make allowance for wear and tear,

age and obsolesce. The rate of depreciation is determined from the unexpired

economic life of the plant and the gross current replacement cost. The value

obtained is known as the existing use value (EUV) or Book Value (BV) and are

economic values, which must reflect the economical production of service

capacity of the machine, rather than the cost of replacing the physical entity as

in the case of valuation for insurance.

11
2.2.3 Open market valuation or disposal method

The exchange of hands in the disposal of a facility may happen in two ways:

• The change of hands may not involve a change of position or location

and the plant remains in-situ.

• The sale may require a relocation of the plant to another town or country.

2.3 Method of Valuation Specific to the Company

The method of valuation specific to the engineering equipment assets of the company

under study is the Depreciated replacement cost method. This method is well explained

in section 2.2.2 of this report.

2.4 Present Method in Practice in the Company

The company is a start-up and is not yet involved in depreciation activities.

Therefore, there is no method in use currently at the company.

2.5 Depreciation

Depreciation may be defined as a method of spreading the cost of a fixed asset

over the life expected years of use of the asset (Fajobi, 2012). It is a decrease in

the value of physical properties over time. A depreciable asset is one used in a

business to produce income. Different kinds of assets can depreciate over time

e.g., machinery, buildings, vehicles, patents, copyrights, furniture, and

equipment. The fact that depreciation does occur is easily established and

12
recognized, the determination of its magnitude in advance is not easy. The

actual amount of depreciation can never be established until the asset is retired

from service. Additionally, a depreciable asset may be classified as personal

assets such as machinery or equipment, and real assets namely land and

generally anything that is erected on, growing on, or attached to the land.

However, the land itself is never depreciable.

There are many methods of calculating depreciation. Two major methods are

the MACRS system and the alternative MACRS method. The methods use the

concept of service life to determine the rate of depreciation. The methods used

in computing the appropriate rates include the straight-line method, the

declining balance method and a third method which is a combination of the two

methods.

Depreciation has several causes some of which are very difficult to predict or

anticipate. It can be broadly classified as follows:

1. Normal depreciation

a. Physical

b. Functional

2. Depreciation due to changes in the price level

Some methods of calculating depreciation are explained below:

13
2.5.1 The straight-line method

The straight-line method of computing depreciation assumes that the loss in the

value is directly proportional to the age of the asset. The equations shown below

are used in the calculation of the straight-line method.

𝐵−𝑆
𝑑𝑘 = …………………………………2.1
𝑁

(𝐵−𝑆)𝑘
𝐷𝑘 = 𝑁
…………………...…………… 2.2

𝐵𝑉𝑘 = 𝐵 − 𝐷𝑘 …………………….……………… 2.3

Where,

• N = depreciable life of the asset in years;

• B = Unadjusted cost basis;

• dk = annual depreciation deduction in the kth year (1<k<N);

• BVk = book value at the end of year k;

• S = salvage value at the end of depreciable life of the asset;

Dk = cumulative depreciation through year k;

2.5.2 The declining balance method

In the declining line method, sometimes called constant percentage method or

the Matheson formula, it is assumed that the cost of depreciation is a fixed

percentage of the book value at the beginning of the year (Koya et al, 2009).

The ratio depreciation in any one year to the book value at the beginning of the

year is constant throughout the life of the asset and is designated by R (0<R<1).

14
In this method, R = 2/N when for example a 200% declining balance is being

used, and N equals the depreciable life of an asset. The following relationships

hold for this method.

𝑑1 = 𝐵(𝑅) …………………………………. 2.4

𝑑𝑘 = 𝐵(1 − 𝑅)𝑘−1 (𝑅) ………………………...2.5

𝐷𝑘 = 𝐵{1 − (1 − 𝑅)𝑘 }………………………..2.6

𝐵𝑉𝑘 = 𝐵(1 − 𝑅)𝑘 …………………………….2.7

𝐵𝑉𝑁 = 𝐵(1 − 𝑅)𝑁 ……………………………2.8

15
 CHAPTER THREE

3 METHODOLOGY

This chapter contains the details of the engineering valuation procedures carried out in

the company. It entails all the facts, figures and tools that were of great importance in

the valuation study.

3.1 List of Engineering Equipment Asset to be Evaluated

The hardware section of Intecon Partnership Ltd. would be evaluated with the

performance of appraisal on individual pieces of equipment, machinery etc.

Table 3.1 contains the assets in the company to be evaluated.

3.2 The Procurement History and Costs

This chapter expatiates on the equipment to be valued. It shows the date of

purchase and the cost as at the time of purchase in a tabular form. The

procurement history and costs are shown in table 3.2.

3.3 Valuation Analysis

The straight-line method for calculating depreciation is used in this analysis as

discusses in section 2.5.1 of this report. Each asset is taken one after the order

and analysed. It should be noted that all the computations in this section are in

Naira.

16
Table 3.1: List of company assets to be valued (cont'd)
S/N ASSET QUANTITY
1 12kW, 415V 3-Phase Generator 1
2 Hilux Truck 15
3 Air Conditioner 9
4 Switch Over Box 2
5 Computer Systems 24
6 Socket Outlets 15
7 Routers 2
8 Uninterrupted Power Supply 4
9 Network Cables (5 yards per cable) 8
10 Office cabinet (A set containing stools, long tables and short tables.) 15
11 Louvre plate and fittings 25
12 Fluorescent Engine 50
13 Autodesk Design Suite 1
14 Profoscope 1
15 Switches Boxes 1
16 Total Station 1
17 Concrete Tester and Surveyor 1
18 Ultrasonic Thickness Gauge 1

17
Table 3.1: List of company assets to be valued (cont'd)
S/N ASSET QUANTITY
19 Mayhew 200 Drilling Rig 1
20 LaserJet Printers 3

18
Table 3.2: Procurement history of assets to be valued (cont’d)
S/N ASSETS YEAR OF PROCUREMENT UNIT PRICE (₦)
1 12kW, 415V 3-Phase Generator 2013 2,500,000
2 Hilux Truck 2016 10,000,000
3 Air Conditioner 2013 110,000
4 Switch Over Box 2013 60,000
5 Computer Systems 2013 95,000
6 Socket Outlets 2013 500
7 Routers 2013 15,000
8 Uninterrupted Power Supply 2014 50,000
9 Network Cables (5 yards per cable) 2013 1000
10 Office cabinet (A set containing stools, long tables and short 2013 60000
11 Louvre plate and fittings 2013 8000
tables.)
12 Fluorescent Engine 2013 200
13 Autodesk Design Suite 2013 1,500,000
14 Profoscope 2013 400,000
15 Switches Boxes 2013 500
16 Total Station 2014 2,000,000
17 Concrete Tester and Surveyor 2016 400,000
18 Ultrasonic Thickness Gauge 2016 270,000

19
Table 3.2: Procurement history of assets to be valued (cont’d)
S/N ASSETS YEAR OF PROCUREMENT UNIT PRICE (₦)
19 Mayhew 200 Drilling Rig 2013 5,000,000
20 LaserJet Printers 2013 150,000

20
3.3.1 Valuation computation for 12kW, 415V 3-Phase Generator

B = ₦2,500,000 S = ₦300,000 N = 20 K=7

𝐵 − 𝑆 2500000 − 300000
𝑑𝑘 = = = ₦110000
𝑁 20

Dk = dk x K = 110,000 x 7 = ₦770,000

BVk = B - Dk = 2,500,000 – 770,000 = ₦1,730,000

3.3.2 Valuation computation for hilux truck

B = ₦10,000,000 S = ₦450,000 N = 15 K=4

𝐵 − 𝑆 10000000 − 450000
𝑑𝑘 = = = ₦636666(𝑎𝑝𝑝𝑟𝑜𝑥)
𝑁 15

Dk = dk x K = 636,666 x 4 = ₦2,546,664

BVk = B - Dk = 10,000,000 – 2,546,664 = ₦7,453,336

3.3.3 Valuation computation for air conditioning system

B = ₦550,000 S = ₦100,000 N = 20 K=7

𝐵 − 𝑆 550000 − 100000
𝑑𝑘 = = = ₦22500
𝑁 20

Dk = dk x K = 22,500 x 7 = ₦157,500

BVk = B - Dk = 550,000 – 157,500 = ₦392,500

21
3.3.4 Valuation computation for switch over box

B = ₦60,000 S = ₦5,000 N = 25 K=7

𝐵 − 𝑆 60000 − 5000
𝑑𝑘 = = = ₦2200
𝑁 25

Dk = dk x K = 2,200 x 7 = ₦15,400

BVk = B - Dk = 60,000 – 15,400 = ₦44,600

3.3.5 Valuation computation for computer systems

B = ₦95,000 S = ₦5,000 N = 20 K=7

𝐵 − 𝑆 95000 − 5000
𝑑𝑘 = = = ₦4500
𝑁 20

Dk = dk x K = 4,500 x 7 = ₦31,500

BVk = B - Dk = 95,000 – 31,500 = ₦63,500

3.3.6 Valuation computation for socket outlets

B = ₦15,000 S = ₦3,000 N = 30 K=7

𝐵 − 𝑆 15000 − 3000
𝑑𝑘 = = = ₦400
𝑁 30

Dk = dk x K = 400 x 7 = ₦2,800

BVk = B - Dk = 15,000 – 2,800 = ₦12,200

22
3.3.7 Valuation computation for routers

B = ₦60,000 S = ₦10,000 N = 25 K=7

𝐵 − 𝑆 60000 − 10000
𝑑𝑘 = = = ₦2000
𝑁 25

Dk = dk x K = 2,000 x 7 = ₦14,000

BVk = B - Dk = 60,000 – 14,000 = ₦46,000

3.3.8 Valuation computation for uninterrupted power supply

B = ₦400,000 S = ₦50,000 N = 10 K=6

𝐵 − 𝑆 400000 − 50000
𝑑𝑘 = = = ₦35000
𝑁 10

Dk = dk x K = 35,000 x 6 = ₦210,000

BVk = B - Dk = 400,000 – 210,000 = ₦190,000

3.3.9 Valuation computation for network cables

B = ₦40,000 S = ₦10,000 N = 30 K=7

𝐵 − 𝑆 40000 − 10000
𝑑𝑘 = = = ₦1000
𝑁 30

Dk = dk x K = 1,000 x 7 = ₦7,000

BVk = B - Dk = 40,000 – 7,000 = ₦33,000

23
3.3.10 Valuation computation for office cabinet

B = ₦1,500,000 S = ₦300,000 N = 20 K=7

𝐵 − 𝑆 1500000 − 300000
𝑑𝑘 = = = ₦60000
𝑁 20

Dk = dk x K = 60,000 x 7 = ₦420,000

BVk = B - Dk = 1,500,000 – 420,000 = ₦1,080,000

3.3.11 Valuation computation for louvre plates and fittings

B = ₦400,000 S = ₦200,000 N = 40 K=7

𝐵 − 𝑆 400000 − 200000
𝑑𝑘 = = = ₦5000
𝑁 40

Dk = dk x K = 5,000 x 7 = ₦35,000

BVk = B - Dk = 400,000 – 35,000 = ₦365,000

3.3.12 Valuation computation for fluorescent engine

B = ₦2,400 S = ₦400 N=5 K=7

𝐵 − 𝑆 2,400 − 400
𝑑𝑘 = = = ₦400
𝑁 5

Dk = dk x K = 400 x 7 = ₦2,100

BVk = B - Dk = 2,400 – 2,100 = ₦300

24
3.3.13 Valuation computation for Autodesk design suite

B = ₦1,500,000 S = ₦300,000 N = 20 K=7

𝐵 − 𝑆 1500000 − 300000
𝑑𝑘 = = = ₦60000
𝑁 20

Dk = dk x K = 60,000 x 7 = ₦420,000

BVk = B - Dk = 1,500,000 – 420,000 = ₦1,080,000

3.3.14 Valuation computation for profoscope

B = ₦400,000 S = ₦200,000 N = 20 K=7

𝐵 − 𝑆 400000 − 200000
𝑑𝑘 = = = ₦10000
𝑁 20

Dk = dk x K = 10,000 x 7 = ₦70,000

BVk = B - Dk = 400,000 – 70,000 = ₦330,000

3.3.15 Valuation computation for switch boxes

B = ₦1,500 S = ₦300 N = 30 K=7

𝐵 − 𝑆 1500 − 300
𝑑𝑘 = = = ₦40
𝑁 30

Dk = dk x K = 40 x 7 = ₦280

BVk = B - Dk = 1,500 – 280 = ₦1,220

25
3.3.16 Valuation computation for total station

B = ₦2,000,000 S = ₦350,000 N = 20 K=6

𝐵 − 𝑆 2000000 − 350000
𝑑𝑘 = = = ₦82500
𝑁 20

Dk = dk x K = 82,500 x 6 = ₦495,000

BVk = B - Dk = 2,000,000 – 495,000 = ₦1,505,000

3.3.17 Valuation computation for concrete tester and surveyor

B = ₦400,000 S = ₦200,000 N = 20 K=4

𝐵 − 𝑆 400000 − 200000
𝑑𝑘 = = = ₦10000
𝑁 20

Dk = dk x K = 10,000 x 4 = ₦40,000

BVk = B - Dk = 400,000 – 40,000 = ₦360,000

3.3.18 Valuation computation for ultrasonic thickness gauge

B = ₦270,000 S = ₦90,000 N = 20 K=4

𝐵 − 𝑆 270000 − 90000
𝑑𝑘 = = = ₦9000
𝑁 20

Dk = dk x K = 9000 x 4 = ₦36000

BVk = B - Dk = 270,000 – 36000 = ₦234,000

26
3.3.19 Valuation computation for mayhew 200 drilling rig

B = ₦5,000,000 S = ₦700,000 N = 30 K=7

𝐵 − 𝑆 5000000 − 700000
𝑑𝑘 = = = ₦143333
𝑁 30

Dk = dk x K = 143,333 x 7 = ₦1,003,333

BVk = B - Dk = 5,000,000 – 1,003,333 = ₦3.996,666

3.3.20 Valuation computation for LaserJet printers

B = ₦150,000 S = ₦45,000 N = 30 K=7

𝐵 − 𝑆 150000 − 45000
𝑑𝑘 = = = ₦3500
𝑁 30

Dk = dk x K = 3500 x 7 = ₦24500

BVk = B - Dk = 150,000 – 24,500 = ₦125,500

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 CHAPTER FOUR

4 RESULTS AND DISCUSSION

The detailed result of the analysis done in chapter three is outlined in Table 4.1. It

contains the estimates of the calculated values.

Having carried out the valuation of Intecon Partnership Ltd., I believe the ‘Existing Use

Value’ of any unexpired interest in the assets is nineteen million and forty-two

thousand, eight hundred and twenty-two naira (₦19,042,822). To arrive at the above-

mentioned value, the following assumptions were made:

i. Every item installed within a year is assumed to have a depreciation year of

one.

ii. Items whose prices cannot be obtained were assumed.

iii. All the items were bought new.

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Table 4.1: Analysis results (cont'd)

TOTAL TOTAL BOOK

YEAR OF UNIT PRICE
S/N QUANTITY DEPRECIATION VALUE BVK
ASSET PROCUREMENT (₦)
RATE (₦/YR) (₦)

1 12kW, 415V 3-Phase Generator 1 2013 2,500,000 110,000 1,730,000

2 Hilux Truck 1 2016 10,000,000 636,666 7,453,336
3 Air Conditioner 5 2013 110,000 22,500 392,500
4 Switch Over Box 2 2013 60,000 2,200 44,600
5 Computer Systems 20 2013 95,000 4,500 63,500
6 Socket Outlets 1 2013 500 400 12,200
7 Routers 2 2013 15,000 2,000 46,000
8 Uninterrupted Power Supply 2 2014 50,000 35,000 190,000
9 Network Cables (5 yards per cable) 1 2013 40,000 8,800 33,000
10 Office cabinet (A set containing stools, 4 2013 60,000 16,500 1,080,000
11 Louvre plate and fittings 30 2013 8,000 400 365,000
long tables and short tables.)
12 Fluorescent Engine 4 2013 200 2,000 300
13 Autodesk Design Suite 8 2014 1,500,000 35,000 1,080,000
14 Profoscope 40 2013 400,000 1,000 330,000
15 Switches Boxes 25 2013 500 60,000 1,220
16 Total Station 50 2014 2,000,000 5,000 1,505,000

29
Table 4.1: Analysis results (cont'd)

TOTAL TOTAL BOOK

YEAR OF UNIT PRICE
S/N QUANTITY DEPRECIATION VALUE BVK
ASSET PROCUREMENT (₦)
RATE (₦/YR) (₦)

17 Concrete tester and surveyor 12 2014 500,000 400 360,000

18 Ultrasonic thickness gauge 50 2016 270,000 10,000 234,000
19 Mayhew 200 Drilling Rig 3 2013 5,000,000 40 3,996,666
20 LaserJet Printers 10 2013 150,000 2,000 125,500
19,042,822

30
 CHAPTER 5

5 CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusion

Having considered the various assets owned by the company, the true present

worth of the company as an ongoing business for the past 7 years is valued to

be (₦19,042,822).

This value refers to the fair value of the establishment because most of the assets

are yet to reach half of their service lives.

Also, owing to the defined program of both preventive and corrective

maintenance, the right operating condition and environment duly ensured for

the indoor devices, for instance, the well air-conditioned LaserJet printers and

workstations; all of this lends credence to the reasonableness of the result of the

valuation arrived at.

5.2 Recommendation

The introduction of this course into the University’s academic curriculum for

the faculty of Technology has availed me the vast opportunity of appreciating

the need to place value on my asset over time. It also exposed me to another

field of engineering practice which over time had been dominated by other

professionals who lack the competence of valuing Engineering assets.

31
 REFERENCES

Blackledge, M. (2009). Introducing Property Valuation. New York: Routledge.

Fajobi, O. (2012). Depreciation of Assets. Unpublished Lecture Note on Engineering

Valuation. Ile-Ife: Department of Civil Engineering, Obafemi Awolowo

University.

Koya, J., Ogedengbe, M. O., & Omobuwajo, T. (2003). Estimation of Lives and

Depreciation. In T. Koya, & J. Oladejo, Engineering Valuation. Ibadan:

Publishers House.

Massari, M., Gianfrate, G., & Zanettin, L. (2016). Corporate Valuation: Measuring

the Value of Companies in Turbulent Times. New Jersey: Wiley & Sons Inc.

Richmond, D. (1994). Introduction to Valuation. London: Macmillan Press LTD.

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