REIT

A version of this article appeared on our website September 10, 2015. There are not “right” ways and “wrong” ways to value companies. There are not even different ways to value companies. There is one way. Let’s explain what we mean in this illustrative example. Mrs. Nelson owns a candy store (100 shares in all), and she plans to sell $100,000 worth of tootsie rolls, peppermint hard candies, and caramels this year. The average gross margin on each piece of candy sold is 50%, and she expects revenue to grow 3% each year after the first year. She has overhead of about $10,000 per year comprising of a) interest on the loan for the building she owns ($3,000 per year), … Read more