RESIDUAL INCOME Definition

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RESIDUAL INCOME is income from efforts which continue to generate revenue over time without requiring any additional effort (e.g., a stream of future royalty payments from a book).

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PRACTICAL CAPACITY is where the cost of production is based on the practical capacity of production facilities. Therefore, the proportion of overheads allocated to a unit of production is not to be increased as consequence of idle capacity of the plant.

DISOUNT FOR LACK OF MARKETABILITY is an amount or percentage deducted from the value of an ownership interest to reflect the relative absence of marketability.

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