Feasibility and Cash Equivalence

These concepts connect transaction evidence and economic viability. Cash Equivalence puts unusual financing or consideration on a comparable cash basis. Financial Feasibility asks whether a proposed use or project can support its costs and required returns.

Use the pages together when favorable financing, concessions, development costs, or income assumptions could make a reported price look more supportable than the underlying market evidence.

What This Branch Covers

What to Verify

• Whether transaction financing, concessions, or non-real-property items affected reported price.
• Whether income is historical, current, forward, stabilized, gross, or net.
• Whether the capitalization or discount rate matches the income, rights, and forecast period.
• Whether development cost, lease-up, capital spending, financing, and sale assumptions are complete.
• Whether comparable evidence uses the same valuation date, property interest, and market conditions.

Common Mistakes

• Treating reported price, cash-equivalent consideration, seller net proceeds, and market value as interchangeable.
• Applying a capitalization rate to an income measure derived under a different convention.
• Deducting every concession dollar for dollar without evidence of the market’s price reaction.
• Calling a project feasible because expected value exceeds construction cost while ignoring time, risk, and required return.

These pages provide financial education, not an appraisal, feasibility opinion, lending decision, or investment, tax, accounting, or legal advice.

In this section

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