Net Present Value Method
Definition of "Net present value method"
A method widely used for evaluating real estate projects. Under the net present value method, the present value (PV) of all cash inflows from the project is compared against the initial investment (I). The net present value (NPV) which is the difference between the present value and the initial investment (i.e., NPV=PV-I), determines whether or not the project is an acceptable investment. To compute the present value of cash inflows, a rate, called the cost of capital is used for discounting. Under the method, if the net present value is positive (NPV>0 or PV.I), the project should be accepted.
Popular Real Estate Terms
individual who purchases property for another for the purpose of not identifying to the seller and other interested parties the real identity of the true acquirer. The individual who makes ...
An deir to an individual who died intestate and is entitled, under the distribution statute, to a portion of its proceeds. After all claims against the estate are satisfied, the ...
Fence constructed at the property line or other division point separating a subdivision or a home site. It marks the point of separation between two separate properties. ...
Rate of return of capital invested in building improvements. Is segregated from land investments and provides a method of separating property income streams between improvement and land ...
Fee charged by a public registry for the administrative costs of recording an instrument. For example, a municipal registry charges $30 to record a property mortgage. ...
Amount the taxpayer gets back when he or she files the tax return at the end of the reporting year because taxes were overpaid for that year. The tax overpayment equals the tax payments ...
Provision in a mortgage permitting the owner of property to transfer the mortgage to a buyer. ...
The seller disclosure is a statement made in good faith regarding the condition of the home he/she is trying to sell. There is a seller disclosure form – called “Form 17” ...
Registered real estate broker who charge a flat fee, rather than a commission, for real estate purchase and sale transactions regardless of the property's sale price. No fee is charge if ...
Have a question or comment?
We're here to help.