Posted: 5/18/2010 9:08:49 PM EDT
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I'm looking at a proposed valuation for an office building. There is a Capitalization Rate Analysis at various interest rates based on estimated expenses and income. Now, I figured out the the analysis is the profit (rent - expenses) paid in perpetuity. Doing a little searching, I learned that this is one accepted valuation approach.
I guess my question is how are you are supposed to figure out what rate to use? Obviously, I'm no expert and experts will be called in if necessary. I'm just trying to wrap my head around this. |