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
Act of forcing an individual or business to do something against their will. It is a legitimate defense in court to reserve the effect of the compelled act. ...
That part of a roof which projects beyond the sides of the building. The eaves keep rain overflow of the sides of a building structure and seal the roof rafters. ...
Broadly speaking, a commission is a remuneration a person receives after acting on someone else’s behalf.In the real estate world, you’ll usually hear the term “sales ...
Tax credit aimed at encouraging the conservation of natural resources, as well as the development of alternative resource. ...
A triangular shaped end of a building where a double sloped roof meets at the top of the triangle. A gable begins at the eaves of a roof and terminates at the roof ridge. ...
Services provide to a parcel of land public utility companies, such as gas, water, electricity. ...
(1) Flooring in a structure. (2) Open structure with flooring erected outside a main building. A deck can have different levels with direct access to the main structure. It is usually ...
To secure a listing by a real estate agent for a certain parcel of property. For example, a real estate broker wishes to list as many properties a possible to built an inventory of future ...
Mortgage for residential property. ...
Have a question or comment?
We're here to help.