Question: The table below shows the projected net cash flows (including reversion) for Property A and Property B. If both properties sell at fair market value

The table below shows the projected net cash flows (including reversion) for Property A and Property B. If both properties sell at fair market value for a cap rate (initial and terminal net cash yields) of 7%, then which of these two properties is perceived to be riskier by the market? Why?

Annual net cash flow projections for two properties ($1,000,000s):

Year	1	2	3	4	5	6	7	8	9	10
A	1.0000	1.0000	1.0000	1.0000	1.0000	1.0000	1.0000	1.0000	1.0000	15.2857
B	1.0000	1.0200	1.0404	1.10624	1.0824	1.1041	1.1262	1.1487	1.1717	18.6093

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