Use the following property data:

Cash flow from operations

a. Assuming the going-in capitalization rate is 8.00 percent, compute a value for the property using direct capitalization.

b. Assuming the required yield/return on unlevered cash flows is 10 percent, and that the property will be held by a buyer for five years, compute the value of the property based on discounting unlevered cash flows.

c. Assuming the relevant required yield/return on levered cash flows is 15 percent, and that the property will be held by a buyer for five years, what is the present value of the levered cash flows?

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3 4 5 Year NOI Debt Service $125,000 $150,000 $125,000 $150,000 $150,000 $125,000 $150,000 $150,000 $125,000 $125,000 Cash Flow at sale: Sale Price: Cost of sale: Mortgage balance: $2,000,000 $125,000 $1,500,000