What does the term "value in use" refer to?

"Value in use" refers to the present value of future cash flows generated from an asset. This concept highlights the economic benefit that a specific asset brings to its owner, based on its ability to produce income or savings over time. It is distinct from market value, which refers to what the property could sell for in an open market setting.

In the context of property valuation, understanding "value in use" is crucial because it captures the intrinsic value of an asset based on how the owner intends to utilize it, which can significantly differ from its market value. This can apply in scenarios where the asset is generating revenue, such as in rental properties or businesses, where projected income is a vital consideration in the valuation process.

The other options focus on different aspects of property and asset valuation, such as maintenance costs, raw material costs, or current market values, which do not encapsulate the future income potential that defines "value in use." This distinction is essential for appraisers to make informed assessments of an asset's worth based on its projected benefits to the current owner.