What method is characterized by converting future net benefits into present value using a discount rate?

The method characterized by converting future net benefits into present value using a discount rate is yield capitalization. This approach is primarily used in real estate and investment analysis to determine the value of an income-producing property by assessing its capability to generate income over time.

When using yield capitalization, appraisers forecast the future cash flows or net benefits that an asset is expected to produce, and then discount these future cash flows back to their present value using an appropriate discount rate. This discounting process accounts for the time value of money, acknowledging that money received in the future is worth less than money in hand today.

This method is particularly useful for properties that generate income, as it emphasizes the expected profitability and aids investors in making informed decisions. By leveraging future net benefits and incorporating a discount factor, yield capitalization provides a comprehensive assessment of an asset's current worth based on its projected financial performance over time.