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Hi - I am also stuck with this point. Were you able to find the answer?

You have to apply from Texas Instruments. They will provide a thumbdrive with the emulator

I didn't know what YP was until I googled and checked RICS's website. I learn a new term today, Years Purchased. Btw, the term & reversion technique shown in the video is the same as what you were indicating, except I didn't calculate the YP for term rent, YP for perp separately. You can calculate the YP separately and then multiply it to the term rent and reversion rent, respectively. In my video, I discounted the cash flows directly using the respective cap rates. You will get the same result.

@@FabianMoa good explanation. Thanks for the information 👍

That wouldbe the Layer method. kzfaq.info/get/bejne/g6eirJiXns2pgI0.html

The reversion rent has more uncertainty, hence why the reversion yield is higher than the term yield. If the reversion rent has been negotiated and locked in (via contract), then possibly the reversion yield can be equals to the term yield. Unlikely, the term yield will be higher than the reversion yield. That would mean that there is uncertainty in the term rent (which is unlikely, because that is the current rent that is being paid)

@@FabianMoa Thanks for your reply. I am curious why would the term rent be uncertain if the term yield is higher than reversion yield ? Is that simply because higher yield means higher risk ?

Time value of money. Solve for the value of the $230k p.a. in perpetuum aka "cap (capitalisation) rate" calculation for property. This will be the income divided by the cap rate = value of those cash flows. $230,000/0.06. That gives you a value of $3,833,333, which you discount over two years (as this perpetuity takes effect in year 3 onwards) using the discount rate of 6% to arrive at the NPV (net present value) for this perpetuity at year 0 (today) of $3,411,653. I.e., you should pay $3,411,653 for an infinite stream of cash flows of $230,000 starting two years from now (i.e. you get $0 in year 1 and 2, and from year 3 you receive $230k forever). If those cash flows were to start this year, you would pay $3,833,333. For first two years, you are receiving $180,000 per year for two years. So what is the NPV of these cash flows? It is a simple formula you can google, or use a calculator online, or the financial calculator that he is using. The net present value (i.e. what you should pay today for these cash flows, with a discount rate of 4%, is $339,497. Sum these figures to arrive at the year 0 (today) value of these sets of cash flows.

@@MondoHoN Thank you for taking your time to explain it. It is helpful.