You Are Trying to Apply a Multi-Year DCF Analysis to Evaluate

question 23

Multiple Choice

You are trying to apply a multi-year DCF analysis to evaluate an investment property with some long-term leases in it. You observe that other properties with similar lease structure and risk have been selling at cap rates around 11% (based on NOI with no capital reserve) . You believe these other properties typically face capital expenditures on the order of 1% of property value per year in the long run, and that given such expenditures their net cash flows and values would reasonably be expected to grow in the long run at about 3% per year. What discount rate should you apply to your subject property in your DCF valuation?

• A) The Treasury bond rate because of the long-term leases.
• B) 10%
• C) 13%= 11%-1%)+3% = y + g = r.
• D) 14%

Understand the characteristics and differences between multidomestic and global corporations.

Recognize strategies to decrease the failure rate of expatriates.

Identify the roles and advantages of host-country nationals in international operations.

Analyze the causes of expatriate assignment failure.

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Definitions:

Statute

A written law passed by a legislative body at the national or local level.

Security Interest

A legal claim or lien on collateral that secures the performance of an obligation, giving the holder a right to the property if the obligation is not met.

Real Property

Land and anything permanently attached to it, such as buildings or trees.

Principal Debtor

The primary individual or entity legally obligated to repay a debt or loan.