Loan Balance =

Pre-Tax Cash Flow =

Equity Dividend Rate =

Investment Value =

An estimate of the value of income-producing real estate to a particular owner/investor given the investor's desire for a return on equity and the investor's current mortgage position.

- Loan Balance: Current loan balance.

- Pre-Tax Cash Flow: Before Tax Cash Flow.

- Equity Dividend Rate: Required rate of return or equity dividend rate expressed as a percentage. Measures an owner's desired return on equity.

- Investment Value: Investment value.

An investor with a loan balance of $15 million and cash flows of $3 million per year would like to receive a return of 5% on his property investment. What's the investment's value?

- Loan Balance: 15,000,000

- Pre-Tax Cash Flow: 3,000,000

- Equity Dividend Rate: 5.0

It's estimated value is $75,000,000.

Loan Balance

Pre-Tax Cash Flow

Equity Dividend Rate

Investment Value

-------------