Cash Flow Notes Business

Cash Flow Notes Business Opportunities

Consider a real estate investment project that costs $100,000 to build. The current yield of U.S. government bonds is 3 percent. You add 1 to obtain a time value of money of 4 percent. In the first four years, you estimate that the development will bring in $20,000, $30,000, $30,000 and $40,000 of rent. Converting 4 percent to a decimal and adding 1 gives 1.04. Dividing negative $100,000 by 1.04 gives a DCF of negative $96,153.85 in the first year. Dividing $20,000 by 1.04^2 gives a DCF of $18,491.12 in the second year. Dividing $30,000 by 1.04^3 gives

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