find market value

Discounted Cash Flow Approach Use the information provided below to estimate the market value of the office building that has been described using the discounted cash flow approach to income valuation. Assume that you will sell the office building at the end of the 5th year of ownership. (Use the information provided below to answer questions 6 to 14.) Type of Property: Office Building Leasable Space: 50,000 square feet Average Rent: $25 per square foot per year Expected Rent Growth: 2.5% per year Vacancy and Collection Losses: 15% of potential gross income Other Income: $1.50 per square foot per year Expected Growth in Other Income: 3% per year Operating Expenses: 45% of effective gross income Capital Expenditures: 5% of effective gross income Going-In Cap Rate: Going-Out Cap Rate: 7.125% Selling Expenses: 7.5% of future selling price Discount Rate: 8% 7% Discounted Cash Flow Approach Use the information provided below to estimate the market value of the office building that has been described using the discounted cash flow approach to income valuation. Assume that you will sell the office building at the end of the 5th year of ownership. (Use the information provided below to answer questions 6 to 14.) Type of Property: Office Building Leasable Space: 50,000 square feet Average Rent: $25 per square foot per year Expected Rent Growth: 2.5% per year Vacancy and Collection Losses: 15% of potential gross income Other Income: $1.50 per square foot per year Expected Growth in Other Income: 3% per year Operating Expenses: 45% of effective gross income Capital Expenditures: 5% of effective gross income Going-In Cap Rate: Going-Out Cap Rate: 7.125% Selling Expenses: 7.5% of future selling price Discount Rate: 8% 7%