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equitable distribution proceedings), Dvorak used actual rental
income from 1985, and estimated expenses for the same period, and
then inflated his net income amounts at 1.5 percent per year to
produce estimates for 1989. This resulted in 1989 net operating
income for Charlotte of $187,531 and for Monroe of $176,350. The
record in the instant case contains 1989 income statements for
Charlotte and Monroe, including actual rents and expenses. Using
actual rents, as respondent urges, but also using actual
expenses–-since both would presumably have been available to a
hypothetical buyer and seller on the November 11, 1990, valuation
date--results in 1989 net operating income of $189,319 for
Charlotte and $175,905 for Monroe. In comparison with Dvorak’s
estimated amounts, the difference is negligible, and we see no
need to modify Dvorak’s results on the basis of this factor.
(c) Capitalization Rate
Finally, respondent contends that net income multipliers9
applied by Dvorak are erroneous because they exceed the range of
multipliers identified from comparable sales. We first note that
Dvorak’s method did not consist of a simple application of net
income multipliers. Dvorak calculated a discount rate to apply
to cash-flow year by year for 4 years, and a capitalization rate
to apply to cash-flow in the fifth year, which he termed a
9 Dvorak actually used discount and capitalization rates.
A capitalization rate is the reciprocal of a net income
multiplier.
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