From the course: Pre-investing: Before Investing in Real Estate

Unlock this course with a free trial

Join today to access over 25,200 courses taught by industry experts.

NPV demonstration

NPV demonstration - Microsoft Excel Tutorial

From the course: Pre-investing: Before Investing in Real Estate

Start my 1-month free trial Buy for my team

NPV demonstration

“

- All right, now let's see how the NPV and the concept of the discount rate is applied in an Excel format so that you can get a better understanding of these concepts. So let's look at the first one right here. First you've 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. All right, this first part here is the one future payment. All right, if we have a future payment, let's say of $1000 coming in five years, and it's discounted at 10%, what is its net present value today? So we see here that it 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 value…

Contents