Discounted Cash Flow Valuation of Property : Report

Added on - 22 Jul 2020

  • 15

    pages

  • 4489

    words

  • 25

    views

  • 0

    downloads

Showing pages 1 to 4 of 15 pages
DCF MODEL DEVELOPMENT & CASE STUDYVALUATION AND PROFESSIONAL REPORT
EXECUTIVE SUMMARYReal estate industry contribute a lot to the GDP of Australia. This is the reason due to which nowgovernment of Australia is laying down more emphasis on construction sector then miningsector. In past couple of years price of properties increase at fast rate in Australia. Along withthis rent amount also increase which reflect that in upcoming time period further elevation willbe observed in rent property. This condition to some extent is not good for people becauase theyhave to pay more for purchasing homes and paying rent to people. However, real estate firmsbeenfit a lot from price plunge in proerties.
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Planning and designing of valuation of real estate property........................................................1Application of scholarly practice through disciplinary and inter disciplinary knowledge toinnovate solution of problem.......................................................................................................2Ethical implications of property decision making.......................................................................2Strength and weakness of discounted cash flow method.............................................................3Market analysis methods and their applications..........................................................................4Assessment 2...................................................................................................................................5Industry trends.................................................................................................................................5Industry threat and opportunity...................................................................................................5Industry analysis and trends.........................................................................................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8APPENDIX....................................................................................................................................10
INTRODUCTIONReal estate is one of the main industry in Australia as it is growing consistently in thenation. In current report, discounted cash flow valuation of property is done and its value isidentified. Discounted cash flow model is atached in appendix. In first part of the report planningand designing of valuation of real estate property is done. Apart from this, detail discussion iscarried out on discounted cash flow model and its merits and demerits are discussed in detail. Atend of the report, industry analysis is done and on that basis threats and opportuity are identified.Planning and designing of valuation of real estate propertyInvestment propety valuation is the one of the important tool that is used to measure viability ofthe project. If any business firm have two alternatives then it can select specific one of them andwhich one will be selected is decided on the basis of valuation approach. Under real estatevaluation first of all cash flows are estimated. Under this firm can consider previous time periodfigures and on that basis can decide cash flows or it can estimate number of bookings that will beobserved in the business for flates in real estate property. It depends on the business firm thatwhich of mentioned approach it select in its business to determine cash flows for valuationmodel (Warren-Myers, 2012). There are both positive and negative sides of these cash flowapproaches in the business. If past records are taken in to account then it become very easy tomake estimation of cash flows and this is positive side of this approach. Opposite to this, in casepast and present conditions changed at fast rate then in that situation this method can provewrong for the company. On other hand, there is another approach under which assumption ismade about number of bookings that will happened within specific time period. Assumption mayprove wrong either over assumption can be made about over booking or under booking byconsidering predicted bookings. Hence, it is very important to ensure that asumptions almostaccurately made while developing valuation model. In current report it is assumed that in firstyear rental income will be equal to 2346100. On the basis of consideration of inflation rates forfuture time period cash flows are estimated. Inflation rate is considerd because it reflect rate atwhich price changed on yearly basis. On yearly basis rent amount is increased due to increase ininflation rate. Hence, by considering this point on yearly basis inflation rate is enhanced(Bouchouicha and Ftiti, 2012). In alignment to income expenses also increased in business anddue to this reason inflation rate is again considereed for estimating cash outflow amount in1|P a g e
desklib-logo
You’re reading a preview
card-image

To View Complete Document

Become a Desklib Library Member.
Subscribe to our plans

Download This Document