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Key Terms For Ch 18 19 21 22 With Inclusions And Exclusions

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FIN 3351
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Chapter18KeyTerms1Equity dividend rate The capitalization rate for equityIt is derived by dividing the before tax cash flow by the value of the invested equity capital equity investment Sometimes referred to as the propertys dividend rateyield BTCFequity investment2Net income multiplier NIM A cash flow multiplier calculated as the acquisition price divided by the net operating income3Operating expense ratio A measure of annual operating costs defined as operating expenses divided by effective gross income EGIPGIVCPlus4Cash on cash returnChapter19KeyTermsALL5Aftertax equity reversion ATER The beforetax equity reversion defined as net selling price minus the remaining mortgage balance at the time of sale less taxes due on sale NSPremaining debttaxes due6Beforetax cash flow Annual net operating income less annual debt service7Leverage The use of mortgage debt to help finance a capital investment8Levered cash flow The propertys net rental income after subtracting any payments due to the lender9Unlevered cash flow The expected stream of NOIs and the expected net sale proceeds NSPThis represents the incomeproducing ability of the property before subtracting the portion of cash flows that must be paid to the lender to service or retire the debtPlusthesefromchapter22
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