REAL 4000 Test 2 Dietz Questions And Answers With Latest Solutions
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Course
REAL 4000
Institution
REAL 4000
Value of a property or mortgage thus depends on: - 1. Magnitude
2. Timing
3. Riskiness
of expected cash flows
TVM timelines always starts with - - "Time Zero"
Mortgage (debt) timelines normally - 30 years
Most commercial property ownership - 3-7 years
Amount at time "zero" - PV
A single cas...
REAL 4000 Test 2 Dietz
Value of a property or mortgage thus depends on: - 1. Magnitude
2. Timing
3. Riskiness
of expected cash flows
TVM timelines always starts with - - "Time Zero"
Mortgage (debt) timelines normally - 30 years
Most commercial property ownership - 3-7 years
Amount at time "zero" - PV
A single cash flow at any future time point - FV
A repeating amount of cash inflow or outflow, flow normally begins at end of first period, sometimes at
time zero - PMT
This is the measure of time and the number of computations (compounds) - N
Interest Rate, required return, rate of return, opportunity cost, discount rate, IRR, etc. This is some sort
of rate (%) of return (yield) based on risk - I/Y
a fixed amount of money paid or received at the end of every period. Often another name for fixed PMT.
- Ordinary annuity
, Any future cash inflow or outflow occurring only once (often another name for FV). - Lump sum
payment
(1 + r)^n - FV of Lump Sum Formula
(1 + r)^n - 1 / r - future value of an annuity formula
1 / (1 + r)^n - Present value of a lump sum
1-[1/(1 + r)^n] / r - Present value of annuity
ways to solve for time "zero" - 1. find the PVs of six different cash flows and sum the results
2. PV of a five-year $10,000 annuity + PV of a lump sum of $100,000 in year 5
3. Solve as a combined PV problem
when cashflow is uneven: - 1. find the PVs of six different cash flows and sum the results
2. Solve using the variable cash flow capacity of your calculator (CF and NPV buttons)
3. Use a spreadsheet
the lower the price of a property = - higher rate of return
the higher the price of a property = - the lower the rate of return
risk and return are ____________ related - directly
what property types are considered high risk? - land speculation
hospitality
restaurants
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