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16 Cards in this Set
- Front
- Back
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Compounding |
calculation of future values, given assumptions about the amount or amounts invested and the interest rate that is paid on the invested amounts |
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Discounting |
The process for equating the value of future benefits from a real estate investment to an equivalent current (present) value |
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Future Value |
The value of money in some period beyond time zero |
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Hospitality property |
Property classification that includes hotels, motels, and many types of restaurant |
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Industrial Property |
Property classification that includes warehouses and structures that house light manufacturing |
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Internal Rate of Return |
Rate of interest (discount) that equates the presents value of the cash inflows to the present value of the cash outflows; that is, the rate of discount that makes the present value equal to zero |
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Investment-grade properties |
Synonymous with institutional-grade real estate, large, relatively new and fully leased commercial properties located in metropolitan ares, generally well over $10 million, targeted by institutional investors, such as pension fund and foreign investors |
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Investment Yield |
The growth in the invested dollars of an investment. Usually stated as a percentage growth or return |
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Lump Sum |
A one-time receipt or expenditure occurring in a given period |
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Multifamily Property |
Residential property classification that includes apartments |
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Net Present Value |
The difference between the present value of the cash inflows and the present value of the cash outflows |
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Opportunity Cost |
The return the investor is forgoing on an alternative investment of equal risk in order to invest in the asset under consideration. Said differently, it is the return the investor could earn on his next best alternative of similar risk |
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Ordinary Annuity |
A fixed amount of money received every period for some length of time |
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Present Value |
The value of future cash flows at time zero |
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Risk |
The possibility that actual outcomes will vary from what was expected when the asset was purchased |
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Time Value of Money |
Standard techniques for quantifying the effects of time and risk on value |
