PGI for your subject property is currently $250,000 per year. You expect rents to stay flat over
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PGI for your subject property is currently $250,000 per year. You expect rents to stay flat over the next two years but then to grow at an annual rate of 3%. Operating expenses are currently $50,000 and expected to grow 3% annually. Vacancy is currently 10% but should drop to 5% in the third year and stay at that rate for the remainder of the 5-year holding period.
• Create the pro forms cash flow statement for the next 6 years.
• Find the expected resale value in year 5 with a 10% capitalization rate.
• Estimate the property value today if the appropriate discount rate is 8%.
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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