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The ownership group of a hotel was looking to increase the value of the property in 3 years, and then sell it. The purchase price
The ownership group of a hotel was looking to increase the value of the property in 3 years, and then sell it.
The purchase price was $ 27,000,000, based on a prior year cash flow of $1,620,000.
At the end of the third year, the cash flow was $1,800,000.
- Calculate the capitalization rate for the purchase.
- Using the calculated rate from 1 above, calculate the value of the hotel at the end of year 3.
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