Thursday, September 10, 2009

Financial Analysis Calculations for your Commercial Real Estate Investment (2 of 4)

Financial Analysis Calculations for your Commercial Real Estate Investment (2 of 4)

NPV is the sum of the present values of a commercial real estate investment’s positive cash flows and the present values of its negative cash flows. This calculation results in a single sum that can be positive or negative. Investors generally specify a required or target rate of return for investing capital; it is an “opportunity cost” concept.

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