Table 1 provides information regarding a building that is being appraised. The holding period for the building
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Question:
Table 1 provides information regarding a building that is being appraised. The holding period for the building is 2 years. What is your estimate of the building’s value if you apply the following weights during reconciliation: 35% for the sales comparison approach, 10% for the cost approach, 30% for the direct capitalization approach, and 25% for the DCF approach? Round your answer to the nearest dollar and write it in the box.
Table 1
Item | Note |
Net operating income in year 1 | $285,000 |
Net operating income in year 2 | $325,000 |
Net operating income in year 3 | $450,000 |
Net proceeds from selling building in year 2 | $1,800,000 |
Required return | 12.90% |
Going-in cap rate | 16.00% |
Going-out cap rate | 25.00% |
Estimated value based on sales comparison approach | $1,680,000 |
Estimated value based on cost approach | $1,620,000 |
Related Book For
Systems Analysis And Design
ISBN: 978-1119496489
7th Edition
Authors: Alan Dennis, Barbara Wixom, Roberta M. Roth
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