REE-3043 Lecture Notes - Lecture 2: Net Present Value, Cash Flow, Capitalization Rate

• School: FSU
• Department: Risk Management/Insurance, Real Estate and Legal Studies
• Course: REE-3043
• Professor: William M Woodyard

Document Summary

Value: the central idea: examples of alternative value concepts include, market value, mortgage value. Investors expect cash flow from operations and from the sale of the property: value is affected by the magnitude, timing, and riskiness of the expected cash flows. Interest rate, discount rate, rate of return: present value, future value, lump sum, annuity, compounding, discounting. Six time-value-of-money operations: future value of a single lump sum, future value of an annuity, sinking fund payment, present value of a single lump sum, present value of an annuity, payment to amortize a loan. Future value of a single lump sum. Annuities: ordinary annuity (e. g. , mortgage payment, annuity due (e. g. , a monthly rental payment) Present value of a single lump sum. Net present value (npv: the (cid:374)et p(cid:396)ese(cid:374)t (cid:448)alue is the p(cid:396)ese(cid:374)t (cid:448)alue of a p(cid:396)oje(cid:272)t"s (cid:272)ash i(cid:374)flo(cid:449)s, (cid:373)i(cid:374)us the present value of the cash outflows, the (cid:272)ash flo(cid:449)s a(cid:396)e dis(cid:272)ou(cid:374)ted at the i(cid:374)(cid:448)esto(cid:396)"s (cid:396)e(cid:395)ui(cid:396)ed (cid:396)ate of (cid:396)etu(cid:396)(cid:374)