I discounted the next 18 years of net operating income of the property for sale that is being leased by Burger King. I used the cap rate as the discount rate. I ignored any rent increases. I found a negative net present value. My analysis is correct. I can certainly confirm that the property is overvalued.
True or False?
Time Net Operating Income Discount Rate
0 -1,953,309 5.50%
1 $107,432
2 $107,432
3 $107,432
4 $107,432
5 $107,432
6 $107,432
7 $107,432
8 $107,432
9 $107,432
10 $107,432
11 $107,432
12 $107,432
13 $107,432
14 $107,432
15 $107,432
16 $107,432
17 $107,432
18 $107,432