Which of the following methods values a commercial real estate asset by forecasting cash flows and discounting them?

The method that values a commercial real estate asset by forecasting cash flows and discounting them is discounted cash flow analysis. This approach focuses on estimating the future cash flows that the property is expected to generate over time, which may include rental income, operating expenses, and potential resale or exit value. After estimating these future cash flows, they are then discounted back to their present value using a specific discount rate, which reflects the risk and time value of money associated with the investment.

This method is particularly valuable in assessing properties with varying cash flows over time, making it a comprehensive approach to determining an asset's value based on its income-generating potential. This contrasts with other methodologies, such as pro forma analysis which primarily outlines expected revenues and expenses, capitalization of income that uses a single year’s income without regard for future cash flows, or comparative market analysis which looks at the sales prices of similar properties rather than future cash forecasts.