What is the 'discounted cash flow' (DCF) method in Delaware income property valuation?
Why A method that estimates property value by discounting projected future cash flows (income and reversion) back to present value using a required rate of return Is Correct
Answer B: A method that estimates property value by discounting projected future cash flows (income and reversion) back to present value using a required rate of return
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
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Key Terms to Know
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Math Concepts
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