Jer Anna Ginzburg, CFA, is using the following information to analyse a potential investment in an industrial building. Estimated 12 months' cash net operating income (NOI) - $40 Funds from operations (FFO) - $30 Cash and equivalents-$30 Accounts receivable-$20 Debt and other liabilities - $250 Non-cash rents - $5 Recurring maintenance-type capital expenditures - $10 Shares outstanding - 10 million shares Expected annual dividend next year (2014) - $3.00 Dividend growth rate in 2015 and 2016 - 4% Dividend growth rate (from 2017 into perpetuity) - 3% Assumed cap rate - 8% Office subsector average P/FFO multiple - 12× Office subsector average P/AFFO multiple - 20x Ginzburg's cost of equity capital - 11% Risk-free rate-2% ren Bey SMUU The value of Ginzburg's potential investment using a price-to-FFO approach is clos Hto:

Jer Anna Ginzburg, CFA, is using the following information to analyse a potential investment in an industrial building. Estimated 12 months' cash net operating income (NOI) - $40 Funds from operations (FFO) - $30 Cash and equivalents-$30 Accounts receivable-$20 Debt and other liabilities - $250 Non-cash rents - $5 Recurring maintenance-type capital expenditures - $10 Shares outstanding - 10 million shares Expected annual dividend next year (2014) - $3.00 Dividend growth rate in 2015 and 2016 - 4% Dividend growth rate (from 2017 into perpetuity) - 3% Assumed cap rate - 8% Office subsector average P/FFO multiple - 12× Office subsector average P/AFFO multiple - 20x Ginzburg's cost of equity capital - 11% Risk-free rate-2% ren Bey SMUU The value of Ginzburg's potential investment using a price-to-FFO approach is clos Hto:

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 14M

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