Property Valuation
In South Dakota, the 'discounted cash flow' (DCF) method in commercial real estate calculates:
AThe historical cash flows from a property over a 5-year period
BThe present value of all projected future cash flows and the expected reversion (sale) at a chosen discount rate✓ Correct
CThe difference between current rent and market rent
DThe property's cash flow before depreciation deductions
Explanation
DCF analysis projects all future operating cash flows and the net proceeds from a future sale (reversion), then discounts each to present value at the investor's required rate of return (discount rate).
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