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Brossard Investment Company is considering the purchase of the Apartment South project. Next year s NOI and cash flow is expected to be $ 2
Brossard Investment Company is considering the purchase of the Apartment South project. Next years NOI and cash flow is expected to be $ and based on Brossards economic forecast, market supply and demand and vacancy levels appear to be in balance. As a result, NOI should increase at percent each year for the foreseeable future. Brossard believes that it should earn at least a percent return on its investment.
a Assuming the above facts, what would the estimated value of the property be now?
b What goingin cap rates should be indicated from recently sold properties that are comparable
to Apartment South?
c Assuming that in part a the required return changes to percent, what would the value be now? d Assume results in part c What should the investor now be observing regarding the price
of comparable sales? What market forces may be accounting for the differences in value
between a and c
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