From the course: Real Estate Analysis Foundations

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Net present value exercise

Net present value exercise - Microsoft Excel Tutorial

From the course: Real Estate Analysis Foundations

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Net present value exercise

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- Alright, now, let's see how the NPV and the concept of the Discount Rate is applied in an Excel format, so that you could get a better understanding of these concepts. So, let's look at the first one right here. First, you 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. Alright, this first part here is the One Future Payment. Alright, if we have a Future Payment, let's say, of $1,000 comin' in five years, and it's discounted at 10%, what is its net present value today? So, we see here that it's 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…

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