Techinique 3 is different from Technique 2 and 4 in that it uses cash flow to shareholders, instead of cash flow from assets.

NI1 is net income before debt service. This is used as the operating cash flows.

1. FxMxV is the debt service. Subtract this from NI to get the cash flow to shareholders CFTS.

2. Discount the CFTS for 1 year to find the PV. Repeat the same for 10 years.

3. This is an estimated value of property in Year 10 based on the cap rate method. Rr is an estimated cap rate. The is a cash inflow (change in capital spending) in Year 10 when we sell the property in Year 10.

4. When we sell the property, we need to pay for closing costs. b is the closing cost as a percentage of the sale price. This is a cash outflow in Year 10.

5. This is the balance of debt that needs to be paid off. This is a cash outflow in Year 10. The net of #3, #4, and #5 will be discounted back for 10 years to find the PV of the terminal cash flow.

6. V is the current value of the property, which is unknown and the one we want to find. (1-M) x V is the property value attributed to shareholders. This should be the same as the PV of all CFTS (left side of the equation).

The article provides information for all variable in this equation, except V. We can plug in all numbers in the equation and solve for V to find the property's current value.