Beruflich Dokumente
Kultur Dokumente
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Philippine Investment Climate
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Philippine Investment Climate
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Philippine Investment Climate
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Philippine Investment Climate
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Real Estate Investment
Real Estate Investment Analysis
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Real Estate Cycle
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Real Estate Cycle Investment Strategy
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Real Estate Risk and Return
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Investment Decision Process
Investment Decision Process
Evaluating and
Identification of the analyzing the Implementation of the
type(s) of real estate identified type(s) of final decision by
you intend to invest. real estate for their preparing an action
costs and financial/ plan:
productive potentials.
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Real estate markets in most countries are not as
organized or efficient as markets for other, more liquid
investment instruments.
1. Payback Period
2. Accounting Rate of Return
3. Net Present Value (discounted
cash flows analysis)
-Profitability Index
4. Internal Rate of Return
Financial Evaluation Techniques
1. Payback Period
. Measures the length of time to recover
from the expected future cash flows, the
original investments.
2. Accounting Rate of Return
. It determines the average rate of return the
investment will generate over its whole life
to the capital invested.
Payback Period/Accounting Rate of
Return (ARR)
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Time Value of Money
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Present Value Computation
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Present Value of Annuity
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Present Value of Annuity Example
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Computing Periodic Amortization Using
the PV Annuity Technique
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Future Value (FV)
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Future Value (FV) Example
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Future Value (FV) Sample Problem
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Future Value (FV) Solution to Sample
Problem
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Compounding/Discounting Periods More
than Once a Year
When the frequency of compounding or
discounting periods is more than once a year
(semi-annually, quarterly or even monthly),
adjust first the i (interest rate) and the n (period)
before applying the appropriate table factor.
Example: i=6%, n=5 yrs compounding/
discounting period is semi-annually:
Adjustments: 1= 6%/2 = 3%
n=5 yrs x 2 = 10 periods
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Present Value/Future Value Variables
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Evaluation Techniques
(Discounting Methods)
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Net Present Value (NPV)
Formula:
Present value of cash inflows xxx
Less: Cost of Investments xxx
Net Present Value xxx
When the NPV is positive, the investment/project
is acceptable.
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Example of NPV - Annuity
Assumed data:
Cost of Investment P12,950,000
Annual Cash Inflows P 3,000,000
Estimated Holding Period 10 years
Cost of Capital 12%
(Minimum Required Rate of Return)
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Solution to Example of NPV - Annuity
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Example NPV-Uneven Cash Flows
Assumed data:
Cost of Investment P31,000,000
Estimated Annual
Cash Inflows (net)
Years Cash Inflows
1 P 10,000,000
2 20,000,000
3 10,000,000
4 10,000,000
5 5,000,000
Cost of Capital 14%
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Solution to Example NPV-Uneven Cash
Flows
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Internal Rate of Return (IRR)
The IRR when used as the discounting rate of
the present value of future cash inflows, the
NPV is equivalent to ZERO.
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Example IRR (Even Cash Inflows)
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Profitability Index
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Profitability Index
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Profitability Index
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Capital Rationing Analysis
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Capital Rationing Analysis
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Capital Rationing Analysis
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Capital Rationing Analysis
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Cost-Volume-Profit (CVP) Analysis
Variable costs/expenses:
These are costs and expenses that vary or
change in proportion to the change in the
level of production and sales.
Fixed operating expenses:
These are expenses that do not vary or
change regardless of change in the level of
production and sales.
Contribution Margin:
The difference between revenue and
variable costs/expenses.
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Cost-Volume-Profit (CVP) Analysis
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Cost-Volume-Profit (CVP) Analysis
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Cost-Volume-Profit (CVP) Analysis
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Breakeven Point (Multi-Products)
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Breakeven Point (Multi-Products)
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Breakeven Point (Multi-Products)
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Marissa Benitez
Director | Valuation & Advisory Services
+63 917 860 0952
Marissa.benitez@colliers.com
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