In this lecture, walk through an example to see how different investments generate different NPVs.Â
- All right, now let's see how the NPV…and the concept of the discount rate…is applied in an Excel format…so that you can get a better understanding…of these concepts.…So let's look at the first one right here.…First you've got to download this file.…This file is part of the file here that you can download,…and just go to the NPV worksheet here.…You can ignore the other ones for now…'cause we're going to use this file again later…to look at the internal rate of return.…All right, this first part here is the one future payment.…
All right, if we have a future payment,…let's say of $1000 coming in five years,…and it's discounted at 10%,…what is its net present value today?…So we see here that it calculated at 621.…So if I click on this right here,…we see the formula.…The formula is saying it is equal to the future payment…divided by one plus the discount rate,…which is raised to the power of five years.…
And if you change any of the assumptions here,…so let's say if you increase the value in the future,…then this will increase.…
Author
Symon He
Released
11/30/2018Note: This course uses data and example properties from the United States, but the concepts taught and tools provided are just as useful for any market.
- Determining if real estate investment is right for you
- Choosing a market and a property
- Using financing
- Strategies for first-time investors
- Real estate market cycles
- Valuing a property
- Analyzing your market
- How leverage impacts investments
- Real estate investment case studies
Skill Level Intermediate
Duration
Views
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Introduction
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Start here3m 29s
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1. Case Study: Joe's First Investment
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Why invest in real estate?6m 38s
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Meet Joe2m 47s
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2. The Many Ways to Invest in Real Estate
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3. Real Estate Market Cycles
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The recovery phase8m 18s
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The expansion phase4m 25s
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The hypersupply phase4m 20s
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The recession phase5m 57s
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The next bust?7m 18s
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4. How to Value a Property
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5. Understanding Your Market
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Where to get the data5m 32s
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Regional analysis18m 2s
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Neighborhood analysis9m 33s
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Competitive analysis14m 41s
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6. What Makes a Good Investment?
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Discount rate2m 42s
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NPV demonstration7m 34s
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IRR demonstration4m 24s
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How to use the measures6m 3s
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NPV vs. IRR4m 51s
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Measures of return summary7m 49s
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7. Understanding Leverage
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The amortization calculator3m 57s
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Debt leverage summary4m 41s
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8. Case Study: Rental Income Property Analysis
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Market research, part 116m 32s
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Market research, part 27m 8s
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Conclusion
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Congratulations1m 29s
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Video: NPV demonstration