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18 months to sell one apartment complex.19 In other words, in the
18-month period following the applicable valuation date, a
hypothetical broker could sell either The Landings, Fox Hill, or
Stonehenge. With respect to the other two complexes, we believe it
would take another 12 months to sell one of them, and another
12 months to sell the other one. Because the dollar amount of real
estate sales in Genesee County was greater in 1992 than 1991, and
given the public's stated interest in the subject property, we do not
believe that a hypothetical broker would have needed as much time to
market the last two complexes, as the first.
5. Applicable Discount
We must discount the value of each apartment complex that cannot
be sold within a reasonable time, taking into account the time value
of money and the time that each complex must be marketed in order to
be sold. For purposes of our analysis, we use the following formula
to calculate the applicable present value rates: 1 - (1 + i/n)-ny;
i equals the discount rate, n equals the number of months over which
the discount rate is compounded,20 and y equals the number of years
19 As to respondent's assertion that investors would most
likely buy the apartment complexes as a block, we find nothing in
the record supports this assertion. The record merely shows that
many individuals and organizations were interested in investing
large sums of money in apartment complexes.
20 To simplify our calculations, we compound monthly.
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