Question: How do I make assumptions for the exit cap and discount rate in the following question using the screenshot below? Estimate each propertys current value
How do I make assumptions for the exit cap and discount rate in the following question using the screenshot below?
"Estimate each propertys current value by calculating the present discounted value of expected future cash flows given to you in Exhibit 11 (Screenshot Below). To complete your valuation, you will need to make an exit cap and discount rate assumption."
Please include work, calculations, and reasoning. Thank you!
Pro forma Brookline Road Shopping Center Expense growth assumption 2.00% Exit cap rate assumption CapEx reserve Discount rate assumption 17% 2016 2017 $1,590,772.76 $1,607,869.37 2018 $1,625,375.14 2019 2020 2021 $1,643,300.28 $1,766,655.25 $1,785,450.79 $68,118.23 $1,643,300.28 $1,698,537.03 $1,785,450.79 $722,794.82 $737,250.72 $751,995.73 $920,505.46 $961,286.31 $1,033,455.06 $1,590,772.76 $1,607,869.37 $681,105.70 $694,727.82 $909,667.06 $913,141.55 $1,625,375.14 $708,622.37 $916,752.77 Gross rental revenue Vacancy Net rental revenue Total operating expenses Net operating income Capital costs Tenant improvements Leasing commissions Capital reserves Total capital costs Operating cash flow $154,643.40 $154,643.40 $755,023.66 $155,234.06 $155,234.06 $757,907.49 $155,847.97 $155,847.97 $760,904.80 $156,485.93 $156,485.93 $764,019.53 $179,470.25 $9,500.00 $163,418.67 $352,388.92 $608,897.39 $175,687.36 $175,687.36 $857,767.70 Property sale Total property cash flow $755,023.66 $757,907.49 $760,904.80 $764,019.53 Current property valuation
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
