From the course: Real Estate Analysis Foundations

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Discounted cash flow and the net present value (NPV)

Discounted cash flow and the net present value (NPV) - Microsoft Excel Tutorial

From the course: Real Estate Analysis Foundations

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Discounted cash flow and the net present value (NPV)

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- Let me ask you a quick question. Would you rather get $100 right now or get $100 a year from now? All things equal, the answer is really clear, right? You want $100 right now. Why would you wait a year for that? But let's look at another example. Would you rather take $100 right now or $1000 in 10 years? Now, it's kind of more difficult, maybe some of you might choose, still choose to get the $100 now but some of you may be willing to wait 10 years in order to get $10,000. And the questions that might go through some of your minds may be, well, who's guaranteeing it and do I have confidence that person who's going to offer me the 1000 in 10 years is actually going to be able to fulfill on that request? When investors think about the profits coming from an investment, that's one of the things that they've got to grapple with, it's not just how much they're going to make from investment, but it's when they're actually going to receive those profits, and one of the ways that investors…

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