Question

Given the following information, calculate the price-FFO multiple for the following REIT: net income: $1,200,000; gains/losses from infrequent and unusual events: $0; amortization of tenant improvements: $120,000; amortization of leasing expenses: $75,000; depreciation (real property): $2,675,000; stock price: $40; market capitalization: $40,000,000. A) 0.10 B) 4.07 C) 9.83 D) 393.12 Answer: C chapter 17 use financial calculator

Answer 1

As per the question and information, we can compute that the answer will be option C) 9.83.

By using the formula,

Net income to common (calculated in accordance with US GAAP) + Depreciation – Gains on sale + Non-controlling (NCI) interest expense, net of NCI cash dividends.

The cash flow from operations is measured by real estate investment trusts (REITs) using a number called funds from operations (FFO). Real estate firms utilize the metric FFO to assess their operational success.

In that they both replace net income and take into account depreciation and amortization, FFO and EBITDA are comparable. The primary distinction between the two metrics is that FFO is used to determine free cash flow from operations while EBITDA aims to quantify profitability from operations.

For real estate investment trusts in particular, a leverage ratio termed funds from operations (FFO) to total debt is used to assess a company's risk (REITs).

To learn more about FFO: https://brainly.com/question/19578852

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