As-is Vs. Prospective Stabilized Discount Rate

[PL1957]

You can not have multiple discount rates for the same model. Otherwise, the rate of return is different depending upon which year you are looking at in the model. The return of the cash flow can not change year-to-year.

Of course you can. The risk characteristics of the cash flow can change from year to year, necessitating a change in the rates. As an example, if I have building with an A+ rated tenant paying an above market rate who we know is leaving in 3 years, we would be completely justified in having different rates for years 1-3 than years 4-10. The math is actually pretty simple.