D) Undertake a 10 Discounted Cash Flow Analysis Assuming that:

-Rents increase by .05% per year

-Maintenance fees increasing by 1% per year

-In year 5 a new Heating and Cooling System is going to be need and costs $100,000

The expected sale of the property in year 10 is expected to be based on and original sale price of 1.8 million and total (10 year) appreciation of 12%

-The Opportunity Cost of Capital is (what typical buyers can borrow at and/or receive from investments, is 8%.

Note that there are different ways to set up these DCF tables in excel but in case you want some guidance here is how I did mine.

Top row vertical: YR 1, YR 2, YR 3, YR 10

Rows horizontal: (Rents/EGI) increasing .05%/year, Mgmt. Fees (15%/year and fixed over time), Maintenance fees ($40k year 1, 1% per year after that), property taxes (20k * .08% per year), resale, NOI, PV (8% Discount rate)

TIP: the DC analysis generates a higher value than the Direct Capitalization Approach