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Future Value of a Lease
Posted on 11/13/13 at 11:08 am
Posted on 11/13/13 at 11:08 am
Was hoping someone on the money board could help me with a time value of money explanation. I'm not well versed in finance. I am trying to determine the value of a lease that is being bought out. For example purposes lets assume the lease has 20 years left and must account for
Inflation, what is the best method for determining a fair price for this lease/property to be purchased at?
If you need more info please let me know
Any advice/explanation helps. Thanks.
Inflation, what is the best method for determining a fair price for this lease/property to be purchased at?
If you need more info please let me know
Any advice/explanation helps. Thanks.
2
Posted on 11/13/13 at 11:13 am to tigerfan102
Residential/Commercial/Vacant Land? Area? Current value and purpose of lease?
Posted on 11/13/13 at 11:16 am to tigerfan102
We need to know the lease terms and we can calculate Net present value for you.
Posted on 11/13/13 at 11:16 am to BigAppleTiger
Commercial property currently leased to a development company. Property/lease is being purchased. The property value is currently undetermined but I'm looking more for how to determine a value for the lease which has 20 years remaining.
Posted on 11/13/13 at 11:19 am to tigerfan102
Lease is complicated but on average generates $4,000/mo
Payments made monthly, there is a base rent and a % rent but for example purposes lets assume it generates on avg 4k/mo
Payments made monthly, there is a base rent and a % rent but for example purposes lets assume it generates on avg 4k/mo
Posted on 11/13/13 at 11:32 am to tigerfan102
PV of just the payments at 4%(figure I used for inflation) is around $662k.
This post was edited on 11/13/13 at 11:34 am
Posted on 11/13/13 at 11:37 am to southernelite
Can you explain how you solve for these values? If it's easy to do so.
Cliffs will be fine
Thanks
Cliffs will be fine
Thanks
Posted on 11/13/13 at 11:45 am to tigerfan102
To get what he did, use excel:
=PV(.04/12,20*12,4000)= ~ $660k
If you open the function tool in excel, it will explain what each number is. You can then play with the interest rate to adjust accordingly for inflation.
=PV(.04/12,20*12,4000)= ~ $660k
If you open the function tool in excel, it will explain what each number is. You can then play with the interest rate to adjust accordingly for inflation.
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