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Valuation of real estate assets using the adjusted present value method

Valuation of real estate assets using the adjusted present value method Explains that three approaches to valuation under leverage are found in the financial economics literature: weighted average cost of capital (WACC); flow‐to‐equity (FTE) or residual equity income (REI); and adjusted present value (APV). Although both the WACC and the FTE methods have been extensively used in real estate investment analyses, it appears that the APV has received little attention in the real estate literature. This is surprising because the reasons that render the APV preferable to the other two methods exist in most real investment situations. Provides an introduction to the APV method and illustrates it with a numerical example. Discusses potential applications of this method in different real estate investment problems. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Property Finance Emerald Publishing

Valuation of real estate assets using the adjusted present value method

Dogˇan Tırtırogˇlu
Journal of Property Finance , Volume 8 (1): 17 – Mar 1, 1997
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17 pages

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Publisher
Emerald Publishing
Copyright
Copyright © 1997 MCB UP Ltd. All rights reserved.
ISSN
0958-868X
DOI
10.1108/09588689710160480
Publisher site
See Article on Publisher Site

Abstract

Explains that three approaches to valuation under leverage are found in the financial economics literature: weighted average cost of capital (WACC); flow‐to‐equity (FTE) or residual equity income (REI); and adjusted present value (APV). Although both the WACC and the FTE methods have been extensively used in real estate investment analyses, it appears that the APV has received little attention in the real estate literature. This is surprising because the reasons that render the APV preferable to the other two methods exist in most real investment situations. Provides an introduction to the APV method and illustrates it with a numerical example. Discusses potential applications of this method in different real estate investment problems.

Journal

Journal of Property Finance – Emerald Publishing

Published: Mar 1, 1997

Keywords: Financial risk; Gearing; Investment; Leverage; Real estate

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