Financial Modelling Flashcards
What is an Array?
A group of cells in a row or column
What is an IRR?
The rate of return that gives a NPV of zero.
What is Cost of Capital?
The cost of money (interest)
What is an Equity Multiple?
Total equity out (including rent)/total equity in
What is Cash on Cash?
Annual NOI/Cash invested
What guidelines do you follow when modelling?
FAST
What is FAST?
Flexible
Appropriate
Structured
Transparent
What is leakage on a BTR scheme?
Leakage is operating expenditure. It depends on the scheme, level of amenities etc but is generally around 25%-27%.
What are the advantages/disadvantages of excel vs argus?
Argus just had inputs and outputs - opaque.
Excel is more flexible and transparent - can look at the actual cash flow.
What outputs did you ensure were being calculated correctly?
IRR, equity and cost of capital
What is a DCF?
Present and future cash flows and an exit value discounted at an appropriate rate to present day terms?
What rate do you use for your discount rate?
Cost of capital (interest rate)
How did your hotel valuation and investment model value the asset?
DCF method
What did your sensitivity analysis in your Hotel model include?
How value was affected using different capitalisation and discount rates.
How leverage affected the investment.
How did leverage affect the investment?
The more the leverage, the greater the IRR up to a point.
If interest rate exceeded IRR, more leverage had a negative effect.
