16634 Lecture Notes - Lecture 9: Discounted Cash Flow, Cash Flow, Net Present Value
Document Summary
Discounted cash flow analysis can be used both to estimate present value and to extract a yield rate from a comparable sale. Generally, dcf analysis is used to solve for present value given the rate of return or for the rate of return given the purchase price. Dcf analysis had its origins as an accounting technique that since the late 70s has been applied to the property industry. In practice, most dcf analysis is performed by computer spreadsheet models, which you will examine in more detail later in the course. So far we have looked at situations where periodic cash flows (payments) are even. However, in many instances property problems involve cash flows that fluctuate. As a result, we can"t use conventional present value techniques to solve problems like the present value of the payments. Instead we have to use discounted cash flow techniques.
