Property Valuation
A Massachusetts commercial appraiser uses a 'direct capitalization' approach versus a 'discounted cash flow' (DCF) analysis. DCF is preferred when:
AThe property has stable, predictable income
BThe income stream is irregular, variable, or when analyzing multi-year holding periods with complex projections✓ Correct
CThe property is under 10 units
DThe property has no vacancy
Explanation
Discounted cash flow (DCF) analysis is appropriate for complex income properties with variable income streams, leases expiring at different times, or when analyzing a multi-year investment scenario. Direct cap is simpler and suited to stable, consistent income.
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