Freehold valuations: the relationship between implicit and explicit DCF methods

Purpose Proposes to elucidate the relationship between implicit and explicit discounted cash flow (DCF) methods in freehold valuations. Design/methodology/approach Sets out a calculation of annual growth with respect to a rack‐rented property. Findings Finds that the advantage of the DCF model is that it makes the assumptions underpinning the valuation explicit. Originality/value This shows how the valuer is allowed to analyse the market and to answer not only the question of the price of the property but also the question of whether it is worth that price.