Questions and Answers 100% Pass
Discounted cash flow analysis is defined as: - ✔✔"The procedure in which a discount
rate is applied to a set of projected income streams and a reversion. The analyst
specifies the quantity, variability, timing, and duration of the income streams as well as
the quantity and timing of the reversion and discounts each to its present value at a
specified yield rate."
A gross rent multiplier (GRM) is defined as: - ✔✔"The relationship or ratio between the
sale price or value of a property and its periodic gross rental income."
Gross rent multiplier (GRM) analysis is based on the assumption - ✔✔that there is a
direct relationship between rental income and value.
Sale
Sale Price
Monthly Rent
GRM
1
$ 98,500
$750
2
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,$103,000
$800
3
$ 91,750
$725
4
$ 94,000
$700
5
$100,000
$775
6
$106,000
$800
7
$ 92,500
$725 - ✔✔Sale
Sale Price
Monthly Rent
GRM
1
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, $ 98,500
$750
131.3
2
$103,000
$800
128.8
3
$ 91,750
$725
126.6
4
$ 94,000
$700
134.3
5
$100,000
$775
129.0
6
$106,000
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