What is the name given to the procedure that converts periodic income into present value?

The procedure that converts periodic income into present value is known as discounting. This process involves determining the present value of future cash flows by applying a specific discount rate. The fundamental principle behind discounting is that money in the future is worth less than money in hand today due to factors like inflation and the opportunity cost of capital.

When an appraiser uses discounting, they take into account the expected income generated over time and calculate how much that income is worth in today's dollars. This is crucial in valuation contexts, as many investments generate cash flows over several periods, and understanding their worth in present terms allows for informed investment decisions.

Capitalization, on the other hand, typically involves converting a single or stable income stream into value based on an expected rate of return, rather than factoring in the time value of future cash flows as discounting does. Residue valuation pertains to a different valuation method where the remainder of property value is derived after accounting for specific components, and market discounting could imply the use of market rates to assess value, but it does not capture the fundamental mechanism of turning periodic income into present value like discounting does.