A venture capital firm has asked me to value a model that we built. This model is designed for use in a life insurance company. Instead of outsouring the model we will instead build our own mode, therefore, saving $2m per annum. The $2m is the amount charged by other companies to license a similar model to us.
Am I correct in saying that the value is simply the Discounted present value of the $2m per annum?
Any suggestions or papers on how I should view this valuation?