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The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 Chapter 24 Discounted Cash Flow Analysis and Special Applications in Income Capitalization.

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Presentation on theme: "The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 Chapter 24 Discounted Cash Flow Analysis and Special Applications in Income Capitalization."— Presentation transcript:

1 The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 Chapter 24 Discounted Cash Flow Analysis and Special Applications in Income Capitalization

2 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 24 2 Applications of Discounted Cash Flow Analysis (DCF)  Both DCF and direct capitalization require an estimate of next year’s net income.  Discounted cash flow requires more than one year’s estimate.  Several years’ estimates of income, vacancy, collection losses, and expenses are required.

3 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 24 3 Table 24.1 Discounted Cash Flow Analysis of a Small Retail Center

4 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 24 4 Table 24.1 Discounted Cash Flow Analysis of a Small Retail Center, continued

5 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 24 5 Table 24.1 Discounted Cash Flow Analysis of a Small Retail Center, continued

6 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 24 6 Table 24.2 Calculating Net Present Value

7 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 24 7 Table 24.3 Calculating Net Present Value

8 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 24 8 Table 24.4 Payback Period

9 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 24 9 Table 24.5 Profitability Index

10 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter Case Study: Analysis of an Office Building Investment

11 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter Case Study: Analysis of an Office Building Investment, continued

12 Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter Value Opinion – Case Study


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