Given the following information, calculate the estimated terminal value of the property at the end of its holding period. Going-out cap rate: 9%, Estimated holding period: 5 years, NOI for year 5: $100,500, NOI for year 6: $102,000.
A) $1,113,333
B) $1,116,667
C) $1,133,333
D) $1,166,667

Question

Quizplus · Accepted Answer

The estimated terminal value can be calculated using the going-out cap rate formula:
Terminal Value = Year 6 NOI / Going-out Cap Rate
Terminal Value = $102,000 / 0.09 = $1,133,333. Therefore, the best choice is C.

Given the Following Information, Calculate the Estimated Terminal Value of the Property