REAL 4000 Test 2 Dietz Study Guide with
Complete Solutions
Value of a property or mortgage thus depends on: - Answer️️ -1.
Magnitude
2. Timing
3. Riskiness
of expected cash flows
TVM timelines always starts with - Answer️️ -- "Time Zero"
Mortgage (debt) timelines normally - Answer�...
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 - Answer✔️✔️-I/Y
a fixed amount of money paid or received at the end of every period.
Often another name for fixed PMT. - Answer✔️✔️-Ordinary annuity
Any future cash inflow or outflow occurring only once (often another
name for FV). - Answer✔️✔️-Lump sum payment
(1 + r)^n - Answer✔️✔️-FV of Lump Sum Formula
(1 + r)^n - 1 / r - Answer✔️✔️-future value of an annuity formula
1 / (1 + r)^n - Answer✔️✔️-Present value of a lump sum
1-[1/(1 + r)^n] / r - Answer✔️✔️-Present value of annuity
ways to solve for time "zero" - Answer✔️✔️-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: - Answer✔️✔️-1. find the PVs of six
different cash flows and sum the results
2
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