You are analyzing the value of a Class A office complex your commercial broker is trying to sell you on. Because of the lucrative tenants and the fact rents are based on gross sales of the tenants, your broker says that the complex is worth $1 billion today. While you are comfortable with the relative accuracy of the near term cash flows, you are interested in figuring out how much he is expecting the complex to be worth at the end of year 4. Assume a 15% discount rate. You expect its cash flows over the next 4 years to be as shown below.

Year Cash flows

0 -20M

1 -10M

2 0

3 12M

4 40M

* What is this Class A complex expected to be worth at the end of year 4? *

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