• Consider the table above for a hypothetical income property that is under consideration for purchase with a $455,000 loan. Using the principles of mortgage equity capitalization, what is the estimated total property value (rounded to the nearest $100)?
  1. $317,500
  2. $482,900
  3. $772,500
  4. $794,200

NOI DS Year 1 Year 2 $72,000 $74,880 60,000 60,000 Year 3 $77,875 60,000 Cash flow Resale in year 3 Less mortgage balance Total cash flow Present value of cash flow @ 15% $12,000 $14,880 $17,875 900,000 -435,000 $12,000 $14,880 $482,875 $10,435 $11,251 $317,498 NOI DS Year 1 Year 2 $72,000 $74,880 60,000 60,000 Year 3 $77,875 60,000 Cash flow Resale in year 3 Less mortgage balance Total cash flow Present value of cash flow @ 15% $12,000 $14,880 $17,875 900,000 -435,000 $12,000 $14,880 $482,875 $10,435 $11,251 $317,498