Suppose that you are using discounted cash flow analysis to estimate the market value of an apartment building. In your analysis, you assume that the property will be sold at the end of the 5th year. After conducting your analysis you found that the income from the property would be as follows:

Year 1 NOI:               $300,000

Year 2 NOI:               $300,000

Year 3 NOI:               $350,000

Year 4 NOI:               $475,000

Year 5 NOI:               $425,000

Net Sale Proceeds:    $3 million

What is the property’s market value using a 8% discount rate?

$3.79 million

$2.59 million

$2.19 million

$3.49 million