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LearnCRE.com - Real Estate 101 - TVM and Cash Flows 2

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Learn Commercial Real Estate and the time value of money - 2

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LearnCRE.com - Real Estate 101 - TVM and Cash Flows 2

  1. 1. TVM 2 – Problems and Review LearnCRE.com Real Estate Finance 101
  2. 2. LearnCRE.com TVM Review 17
  3. 3. LearnCRE.com Questions + What is $100 worth in 10 years at 8% interest? – Monthly compounding and Annual Compounding + What is $100 in 10 years worth today at 8% interest? + Yr 0 = $100; Yr 5 = $350. What is the rate? – By hand? Using Rate Function? Using IRR Function? + Yr0 = $100, Cap Rate is 10%. (Assume no terminal exit) – What is IRR after 10 years? 20 years? 80 years? What is going on here? + What should I pay for these cash flows to get 15% return? + How do rents affect IRR? Exit Values? Timing? 18 Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 ?? 0 0 0 176,911 ?? 25,000 30,000 40,000 51,207 Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 -100,000 10,000 10,000 10,000 100,000 -100,000 5,000 5,000 5,000 100,000 -100,000 10,000 10,000 10,000 80,000 -100,000 10,000 10,000 10,000 10,000 100,000

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