Property Valuation
An Ohio commercial appraiser calculates a terminal cap rate for the DCF analysis. The terminal cap rate is used to:
ACalculate the initial NOI at stabilized occupancy
BEstimate the property's value at the end of the holding period (reversion value)✓ Correct
CDetermine the current market cap rate for comparable properties
DDiscount the annual income streams to present value
Explanation
The terminal cap rate is applied to the projected NOI at the end of the holding period to estimate the property's reversion (resale) value, which is then discounted to present value as part of the DCF analysis.
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