Investment Value Depends on Investment Value

dc.contributor.authordeRoos, Jan A.
dc.contributor.authorCorgel, John B.
dc.description.abstractUsers of discounted-cash flow models for estimating real estate investment values encounter the following problem: the unknown value being estimated depends on inputs to the model that rely on the unknown value. The models, therefore, produce biased estimates of investment value unless iterative or simultaneous solutions are found. The market value literature addresses this problem by invoking simultaneous solutions. Parallel approaches for estimating investment value are hampered by complications resulting from the need to incorporate income tax effects. As shown in this paper, serious estimation bias results from first-run solution models in modern real estate text books and commercially available computer programs. Closed-form solutions for a variety of investment value models are obtainable to remove the estimation bias.
dc.description.legacydownloads2003_19_28_de_Roos___Corgel.pdf: 378 downloads, before Aug. 1, 2020.
dc.relation.ispartofseriesCornell Real Estate Review
dc.rightsRequired Publisher Statement: © Cornell University. Reprinted with permission. All rights reserved.
dc.subjectreal estate financial analysis
dc.subjectinvestment criteria
dc.subjectreal estate finance theory
dc.titleInvestment Value Depends on Investment Value
local.authorAffiliationdeRoos, Jan A.: Cornell University United States of America
local.authorAffiliationCorgel, John B.: Cornell University USA
schema.issueNumberVol. 2
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