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Article: Simple Computer Applications Improve the Versatility of Discounted Cash Flow Analysis.
- Article from:
- Appraisal Journal
- Article date:
- January 1, 2000
- Author:
CopyrightCOPYRIGHT 2000 The Appraisal Institute. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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abstract
Using discounted cash flow analysis, an appraiser can more sensibly interpret real estate value as long as he makes sensible assumptions. Because major variables applied in DCF analysis do vary to a certain extent, depending on different market circumstances, the validity of the model may be affected. Through Monte Carlo simulation, the likelihood of a certain value for all the relevant variables can be predicted. In turn, the use of DCF analysis in property valuation becomes more versatile. With relatively little difficulty, appraisers with basic computer knowledge can value real estate investment, using a DCF simulation model. Only the quality control, ...