EAQE Property valuation question: advantage of the discounted cash-flow method over the traditional residual method

Answer: A. It reflects when each cost and receipt actually occurs, discounting them to present value

Answer: It reflects the timing of each cash flow and discounts it to present value. Why not the others: - Ignores construction costs: All costs are included, spread over time. - Replaces profit with a yield: Profit or a target return is still built in; the difference is timing. - Values only the land: It still starts from the completed development's value. Rule: The traditional residual method treats inflows and outflows as lump sums. The DCF method places each payment and receipt at the time it occurs and discounts them at an appropriate rate, so all are compared on a present-value basis. Source: EAA, A Study Guide to Estate Agency Law and Practice, Part 6, para 14; as at Oct 2026