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what needs to consider when determining property reversionary value? using DCF

what needs to consider when determining property reversionary value? using DCF

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Expert Solution

Here DCF is discounted cash flow

Discounted means converting the future values to present values by using some discount rates i.e discount rate

Discount rates are some interest rates

The reversionary value refers to the value of property at the time of expiration.

The factors that to be considered at the determining the property reversionary value using discounted cash flows.

1. The interest rates available in the market.

2. With that interest we have to calculate the discounting rates or discounting factors.

3. From that discounting rates we have to calculate the present value of the property.

4. To get reversionary value of property we have to calculate the useful life of the property. Example the useful life is 10 years then the discounting rates also to be calculated for 10 years.

5. The entire value of property is to be discounted using all the discounting factors so that we can get the reversionary value of the property.

These are all the points regarding the reversiireve value calculation.

I hope, all the above mentioned points and explanations are useful and helpful to you.

Thank you.

ekkarill92 answered 3 months ago
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