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Estimate the terminal value of the properties

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Question - Bevo Real Estate is a real estate holding company with four properties. You estimate that the income from these properties, which is currently $50m after taxes, will grow 8% a year for the next 10 years and 3% thereafter. The current market value of the properties is $500m, and you expect this value to appreciate at 3% a year for the next 10 years.

Estimate the terminal value of the properties, based on the current market value and the expected appreciation rate in property values?

At the end of the 10th year, what would be the ratio of value to income for the property?

Reference no: EM133042608

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