Lesson 7 Flashcards
List the steps of an after tax cash flow
PGI - vacancy = EGI - operating expenses = NOI -debt service = BTCF - taxes on operation = after tax cash flow
List the steps of an after tax equity reversion
Disposition price - transaction costs = Net sale Price - outstanding balance = BTER - tax on reversion = ATER
Describe the steps of debt service
Change interest rate to j12
Find monthly payment
Annual debt service = pmt x 12
List the steps of taxes on operation
NOI - interest = taxable income before CCA -CCA = taxable income X tax rate = taxes on operation
How do you calculate “cash throw off” return
NOI - interest = BTCF
EDR = BTCF \ equity investment
How do you calculate cash on cash return?
= ATCF year 1 / initial equity
How do you calculate the justified purchase price?
JIF = NPV - mortgage value
How do you calculate IRR using a calculator?
1 P/YR Initial equity (+/-) CFj Y1 AFCF CFj Y2 AFCF CFj Y3 AFCF CFj Y4 AFCF CFj Y5 AFCF + AFER CFj IRR
How do you calculate NPV using a calculator?
RRR I/YR 1 P/YR Initial equity (+\-) CFj ATCF1 CFj ATCF2 CFj ATCF3 CFj ATCF4 CFj ATCF5 + ATCF CFj NPV
How do you calculate the return on the investment
ROI = NOI / Purchase Price
Who do you calculate the Equity Divided Rate
EDR = BTCF / Equity Investment
BTCF = NOI - Debit Payments Equity = purchase price - financing
How do you calculate the holding period return
HPR = OCF + ECF / existing equity investment
OCF - operating cash flows
RCF - revision cash flows
What is the difference between IRR and NPV
IRR provides the return on investment
NPV provides the value of the investment
What is the difference between IRR of equity and IRR on capital?
IRR on capital is derived assuming no debt financing (an all-equity investment)
