Before-tax Discounted Cash Flow (DCF) model
Comparing Basic Financial Feasibility Model to Before-tax Discounted Cash Flow (DCF) Model Analysis
Acquisition Cost + Fix up Cost
- Mortgage
= Total Equity Required to Purchase (Cf0)
GPI
-Vacancy Rate
=GEI
-Operating Expenses
=NOI
- Debt Service
=Operating Cash Flows
Sale Proceeds during last year (Exit Strategy)
-Mortgage Balance
= Terminal Cash Flow (Cf5)
Cf0 Cf0
Cf1 Cf1
Cf2 Cf2
CF3 Cf3
Cf4 Cf 4
Cf5 Cf5
=IRR E Before-tax cost of equity capital
= NPV
Compare IRR E with IRR TC (Purchase investment with cash)
Estimated Investment Value = NPV + Acquisition Cost