Discounted Cash Flow Analysis

‡ Cash Flow: Revenue Expenses
‡ Revenue: Income Generated ‡ Expenses: Cost Incurred ‡ Discounted Cash Flow: Present Value of Future Cash In-flow

‡ Discounting Rate: .Factors Affecting Discounted Cash Flow ‡ Revenue/Income ‡ Expenses/Cost ‡ Escalation Rate ‡ Period: Time line of Project Completion.

Revenue/Income ‡ Revenue Per Year ‡ Marketability of project each year ‡ Project Completion Status ‡ Collection Pattern ‡ Escalation in Market Rate ‡ Surrounding Development ‡ Government Rules & Regulations .

Development cost.Expenses/Cost Incurred ‡ Cost Incurred Per year ‡ Project Completion Status ‡ Escalation in Construction Cost Per year ‡ Project Completion Status ‡ Brokerage charges. . Legal & Administrative Cost Etc.

Escalation Rate ‡ Percentage at which an annual change in the price levels of the goods and services occurs or is expected to occur. ‡ Inflation Rate ‡ Demand & Supply Equation ‡ Interest Rate .

Period: Time line of Project Completion (n) ‡ Type of Project ‡ Time Required for Land Acquisition & Plan Approval ‡ Government Rules & Regulations .

in real estate valuation it is taken as developers profit percentage ‡ Formula: 1 Cash Inflow X (1+ R)n .Discounting Factor (R) ‡ The discount factor is the factor by which a future cash flow must be multiplied in order to obtain the present value ‡ Generally.

‡ Factors Affecting The Value Estimated .Sensitivity Analysis ‡ What is Sensitivity Analysis ‡ A technique used to determine how different values of an independent variable will impact a particular dependent variable under a given set of assumptions.

Factors ‡ Market Conditions ‡ Demand Market Rate ‡ Supply ‡ Cost of Construction ‡ Financing Cost (We do not Consider) ‡ Surrounding Developments ‡ Government Rules & Regulations .

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