Answer-first summary for fast verification
Answer: $36.
## Calculation Steps **Step 1: Calculate Adjusted FFO (AFFO)** - FFO = $65,000 - Subtract non-cash rent: $65,000 - $5,000 = $60,000 - Subtract recurring capital expenditures: $60,000 - $10,000 = $50,000 - AFFO = $50,000 **Step 2: Calculate AFFO per share** - AFFO per share = $50,000 ÷ 20,000 shares = $2.50 per share **Step 3: Calculate forecast share price** - Price-to-AFFO multiple = 12x - Forecast share price = AFFO per share × Multiple = $2.50 × 12 = $30.00 However, let me verify this calculation: Actually, let me recalculate: - FFO = $65,000 - Non-cash rent adjustment: $5,000 (this should be added back, not subtracted) - Recurring capital expenditures: $10,000 (this should be subtracted) **Correct calculation:** AFFO = FFO + Non-cash rent - Recurring capital expenditures AFFO = $65,000 + $5,000 - $10,000 = $60,000 AFFO per share = $60,000 ÷ 20,000 shares = $3.00 per share Forecast share price = $3.00 × 12 = $36.00 Therefore, the correct answer is **$36** (Option B).
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37 An analyst gathers the following information about a REIT for the year just ended:
$65,000$5,000$10,000If the REIT's price-to-adjusted-FFO multiple is 12x, the forecast REIT share price is closest to:
A
$30.
B
$36.
C
$48.