Property Valuation
What is 'discounted cash flow analysis' in Rhode Island commercial real estate valuation?
AReducing the appraised value for cash buyers
BA valuation method that projects future cash flows (NOI and sale proceeds) and discounts them to present value using a discount rate✓ Correct
CA method of reducing rental income for vacancy
DDiscounting the comparable sales for market changes
Explanation
Discounted cash flow (DCF) analysis projects future net operating income and a reversion (sale proceeds) over a holding period and discounts each year's cash flows back to present value using an investor's required rate of return. It is commonly used for commercial investment property.
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