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Reference no. 111-041-6
Authors: Jaime Sabal (FundaciĆ³n ESADE)
Published in: 2011
Length: 11 pages
Data source: Generalised experience

Abstract

When considered as the present value of a perpetuity, the terminal values of income properties have two salient characteristics. First, their cash flows are not homogeneously risky meaning that they must be discounted at different discount rates. And second, some of the outflows take place periodically but not yearly. Because of this, the computation of the terminal value demands a specific procedure. This paper proposes such formulas and discount rates.

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Abstract

When considered as the present value of a perpetuity, the terminal values of income properties have two salient characteristics. First, their cash flows are not homogeneously risky meaning that they must be discounted at different discount rates. And second, some of the outflows take place periodically but not yearly. Because of this, the computation of the terminal value demands a specific procedure. This paper proposes such formulas and discount rates.

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