2 Flashcards
What is het asset value per share
The differerencence between assets and liabilities of the outstanding ordinary shares
Formula for increase in rentals due to depreciation
(1+g)/ (1+d) g= growth rate, d= depreciation
What is equivalent annual annuity and its uses and formula?
It is the N.P.v. Of a project over its annuity for the same
Period
Meaning of n’ p. V >o and N. P. v. <o and npv=0
- Accept project
- Reject project
- Indifferent, neutral relies on other future factors going forward
What is internal rate of return ( I.R.R. ) and how is it affected by discount rate
1 it is the rate at which npv is equal to zero. And discount rate above I.R.R. Gives negative N pv, and vice
Verse
What is beta
It measure systematic risk, is the assets specific risk / the markets risk
What is gross redemption bond
The return of a bond earned on the price at which it was purchased if held to maturity takes into account capital gains and loses andassiemes all interest payments are reinvested
What is Capitalization rate?
- The ratio of a property’s value and Net operating income (noi/ pv)
What is economic value and market value and differences
Net operating income/ capitalization rate
Mv= Net operating income (specific property ) / capitalization rate (average )
What is the gross rent multiplier and Net income multiplier
It tells the investor how much will Need to be payed per $I of noi generated
It tells the investor how much will Need to be payed per $I of gross scheduled income (gsi) generated
Market value / gsi or noi
What is breakeven ration
- The point at which a rental properties expenses are equal to the revenue it generates
[ Operating expenses + debt service. ] / gross operating income
What is a good valuation / appraisal
It should include all anomalies, investor expectations, micro and macroeconomic factors elements of the environment
Key indicators of a good real estate investment (6)
- Income growth
- Capital growth
- Marketability
- Liquidity
5.transfer costs - Manageable operating expense
