The Amount of $1 (Future Value of a lump sum)

An investor has decided to invest the sum of $500,000 today in a

particular investment for a period of 13 years. The interest rate of
the investment stands at 6% p.a. Advise the investor on what the
future value of the investment will be at the end of the period.

Financial Calculator

First, change the payment per year to 1.

To check the no. of payment per year ¬

To change the no. of decimal number ¬

13 6 -$500,000 0
INPUTS

N I/YR PV PMT

OUTPUT

13 6 -1 0
INPUTS

N I/YR PV PMT
 N I/YR PV PMT

OUTPUT
 Present Value (PV) -$500,000
Term - Period 13 years
Interest Rate 6.00% per annum

Future Value (FV) $1,066,464

cial Calculator

1 ¬ PMT
P/YR

¬ C

¬ = 4
DISP

PMT FV

$1,066,646

PMT FV
PMT FV

2.1329 See class note.

 The Amount of $1 (Future Value of a lump sum)

A property investor has secured a loan of $75,000 to carry out

some repairs on the property which is to be paid back in 9 years'
time. The interest rate of the loan is 8% p.a. Calculate how much
is due for payment at the end of the term.

Financial Calculator

9 8 -$75,000 0
INPUTS

N I/YR PV PMT

OUTPUT

9 8 -1 0
INPUTS

N I/YR PV PMT

OUTPUT
Present Value (PV) -$75,000
Term - Period 9 years
Interest Rate 8.00% per annum

Future Value (FV) $149,925

PMT FV

$149,925

PMT FV

1.9990 See class note.

 The Amount of $1 (Future Value of a lump sum)

An investment sum of $1,750,000 is to be compounded daily at

an interest rate of 6% p.a. for 5 years? What will be the value of
the investment after the 5th year?

Financial Calculator
First, change the payment per year to 365. 365

5 6 -$1,750,000 0
INPUTS
¬ I/YR PV PMT
N
×P/YR
OUTPUT

INPUTS 5 6 -1 0

¬ I/YR PV PMT
N
×P/YR

OUTPUT
OUTPUT
 Present Value (PV) -$1,750,000
Term - Period 5 years
Term - Period (days) 1825 days
Interest Rate 6.00% per annum
Interest Rate (days) 0.02% per day

Future Value (FV) $2,362,195

365 ¬ PMT
P/YR

PMT FV

$2,362,195

PMT FV

1.3498 See class note.

1.3498
 Present Value of $1

A 1,000m2 commercial office space on George Street, Sydney,

was let out on a 15 years lease. The rent will be reviewed every 5
years. The property investor estimated that the reviewed rents for
those periods will be $1,200,000 and $1,350,000, respectively.
What is the present value of those future rents assuming a
discount rate of 5% p.a.?

Financial Calculator
Please ensure that the payment per year is returned back to 1 for annual (one lump sum

5 5 0
INPUTS

N I/YR PV PMT

OUTPUT $940,231

10 5 0
INPUTS

N I/YR PV PMT

OUTPUT $828,782
OUTPUT $828,782
 i. Future Value (FV) -$1,200,000 1500000
ii. Future Value (FV) -$1,350,000 10%
Term - Period 5 years 7
Term - Period 10 years
Interest Rate 5% per annum

i. Present Value (PV) $940,231

ii. Present Value (PV) $828,783

annual (one lump sum). 1 ¬

0 -$1,200,000 5
INPUTS

PMT FV N

OUTPUT

0 -$1,350,000 10
INPUTS

PMT FV N

OUTPUT
OUTPUT
 PMT
¬ P/YR

5 5 0 -1

N I/YR PV PMT FV

0.7835

10 5 0 -1

N I/YR PV PMT FV

0.6139
0.6139
See class note.

See class note.

 Rate of Return on Investment

In January 2013, a real estate investment company bought a block

of luxury residential apartments for $45,000,000. The property
was sold in January 2023 for the sum of $72,500,000. Estimate
the rate of return on the investment.

Financial Calculator

10 -$45,000,000 0
INPUTS

N I/YR PV PMT

OUTPUT 4.88
 Present Value PV) -$45,000,000
Future Value (FV) $72,500,000
Term - Period 10 years
Interest Rate ? per annum

Rate of Return 4.88%

0 $72,500,000

PMT FV
 The Amount of $1 Per Annum (FV of series of sum)

A real estate investor makes a profit of $100,000 p.a. on a

commercial property and intends to save $60,000 each year for
the next 15 years. This amount will be saved in a savings account
that offers an interest rate of 6% p.a. At the end of the 15th year,
the total amount will be used to purchase an investment
residential property. Advise the investor on the value that can be
realised at the end of the period.

Financial Calculator

15 6 0 -$60,000
INPUTS

N I/YR PV PMT

OUTPUT

15 6 0 -1
INPUTS

N I/YR PV PMT

OUTPUT
 Payment (PMT) -$60,000
Term - Period 15 years
Interest Rate 6.00% per annum

Future Value (FV) $1,396,558

-$60,000

PMT FV

$1,396,558

-1

PMT FV

See class note.

23.2760
 Annual Sinking Fund

You have decided to purchase a property for investment purpose

in 2028. The initial deposit that will be needed by then is
$1,550,000. How much will you need to invest every year at an
interest rate of 7% p.a. to be able to actualise this?

Financial Calculator

5 7 0
INPUTS

N I/YR PV PMT

OUTPUT $269,530

5 7 0
INPUTS

N I/YR PV

OUTPUT
 Future Value (FV) -$1,550,000
Term - Period 5 years
Interest Rate 7.00% per annum

Payment (PMT) $269,531

-$1,550,000

PMT FV

$269,530

-1

PMT FV

0.1739 See class note.

 Present Value of $1 Per Annum (YP)

An investor is considering investing in a real estate asset by

buying a commercial property that will generate a net annual
income of $1,000,500 for the next 20 years. The investor expects
a rate of return of 6% p. a. How much should the investor pay for
the interest today?

Financial Calculator

20 6 -$1,000,500
INPUTS

N I/YR PV PMT

OUTPUT $11,475,656

20 6 -1
INPUTS

N I/YR PV PMT

OUTPUT 11.4699
 Payment (PMT) -$1,000,500 1500000
Term - Period 20 years 7
Interest Rate 6.00% per annum 10%

Present Value (PV) $11,475,656 ($7,302,628.23)

-$1,000,500 0

PMT FV

-1 0

PMT FV

See class note.

Present Value Of An Unequal Future Cash Flows (Rental Growth)

Atlantic Pty Ltd will be receiving some unequal income from an investment property
the next 10 years. Assuming an interest rate of 10% p.a., what is the present value of t
interest in the property? The stream of income for the years are stated below:
Year 1 – 150,000 Year 6 – 201,000
Year 2 – 150,500 Year 7 – 210,800
Year 3 – 160,000 Year 8 – 210,900
Year 4 – 180,200 Year 9 – 220,500
Year 5 – 160,500 Year 10 – 231,100
Year 1 2
Cash Flow $ 150,000 $ 150,500
PV @ 10% 0.9091 0.8264
Present Value $ 136,364 $ 124,380

Discount Rate 10%

Year 1 2
Cash Flow $ 150,000 $ 150,500
Present Value $ 136,364 $ 124,380

Discount Rate 10%

 3 4 5 6
$ 160,000 $ 180,200 $ 160,500 $ 201,000
0.7513 0.6830 0.6209 0.5645
$ 120,210 $ 123,079 $ 99,658 $ 113,459

3 4 5 6
$ 160,000 $ 180,200 $ 160,500 $ 201,000
$ 120,210 $ 123,079 $ 99,658 $ 113,459

Financial Calculator
Note that you input 0 for Year 0 in this situation

INPUTS $0 CFj 10

$150,000 CFj I/YR

$150,500 CFj

$160,000 CFj

$180,200 CFj

$160,500 CFj
 $160,500 CFj

$201,000 CFj

$210,800 CFj

$210,900 CFj

$220,500 CFj

$231,100 CFj

OUTPUT $1,106,323
 7 8 9 10
$ 210,800 $ 210,900 $ 220,500 $ 231,100
0.5132 0.4665 0.4241 0.3855
$ 108,174 $ 98,386 $ 93,514 $ 89,099

NPV

7 8 9 10
$ 210,800 $ 210,900 $ 220,500 $ 231,100
$ 108,174 $ 98,386 $ 93,514 $ 89,099

¬
PRC
NPV
$1,106,323 See class note
 NPV

$ 1,106,323

$1,106,323

NPV

$ 1,106,323
 Net Present Value (NPV) Of An Investment

An investment has the cash flow in this table. Year

The equity contribution is $1,870,000.
ATER is $2,680,000. 1
The investment period is 10 years. 2
The anticipated rate of return is 13%. 3
What is the NPV of the investment?
4
5
6
7
8
9
10
 Discount Rate 13%

Net Cash Flow Year 0

$120,000 Equity -$ 1,870,000
$140,500 ATCF
$165,000 ATER
$174,000 Cashflow -$ 1,870,000
$190,500 PV @ 13% 1.0000
$202,000 Present Value -$ 1,870,000
$203,300
$205,700
$209,500
$220,150
 1 2 3 4
- - - -
$ 120,000 $ 140,500 $ 165,000 $ 174,000
$ - $ - $ - $ -
$ 120,000 $ 140,500 $ 165,000 $ 174,000
0.8850 0.7831 0.6931 0.6133
$ 106,195 $ 110,032 $ 114,353 $ 106,717

Financial Calculator

INPUTS -$1,870,000 CFj

$120,000 CFj

$140,500 CFj

$165,000 CFj

$174,000 CFj

$190,500 CFj

$202,000 CFj
 $202,000 CFj

$203,300 CFj

$205,700 CFj

$209,500 CFj

$2,680,000 + $220,150 = $2,900,150

OUTPUT
 5 6 7 8
- - - -
$ 190,500 $ 202,000 $ 203,300 $ 205,700
$ - $ - $ - $ -
$ 190,500 $ 202,000 $ 203,300 $ 205,700
0.5428 0.4803 0.4251 0.3762
$ 103,396 $ 97,024 $ 86,415 $ 77,376

Calculator

CFj 13

CFj ¬
I/YR
PRC
NPV
CFj

CFj

CFj

CFj

CFj
 CFj

CFj

CFj

CFj

$2,900,150 CFj

-$144,402
 9 10 NPV
- -
$ 209,500 $ 220,150
$ - $ 2,680,000
$ 209,500 $ 2,900,150
0.3329 0.2946
$ 69,739 $ 854,350 -$ 144,402

NPV -$ 144,402
See class note
$ -
 Internal Rate of Return (IRR) Of An Investment

An investment has the cash flow in this table. The equity Year
contribution is $1,870,000. ATER is $2,680,000. The
investment period is 10 years. The anticipated rate of return 1
is 13%. What is the IRR of the investment? 2
3
4
5
6
7
8
9
10
 Discount Rate 13%

Net Cash Flow Year 0

$120,000 Equity -$ 1,870,000
$140,500 ATCF
$165,000 ATER
$174,000 Cashflow -$ 1,870,000
$190,500 PV @ 13% 1.0000
$202,000 Present Value @ 13% -$ 1,870,000
$203,300 PV @ 11% 1.0000
$205,700 Present Value @ 11% -$ 1,870,000
$209,500
$220,150
IRR
 11%

1 2 3 4
- - - -
$ 120,000 $ 140,500 $ 165,000 $ 174,000
$ - $ - $ - $ -
$ 120,000 $ 140,500 $ 165,000 $ 174,000
0.8850 0.7831 0.6931 0.6133
$ 106,195 $ 110,032 $ 114,353 $ 106,717
0.9009 0.8116 0.7312 0.6587
$ 108,108 $ 114,033 $ 120,647 $ 114,619

11.77%

Financial Calculator

INPUTS -$1,870,000 CFj 13

$120,000 CFj I/YR

$140,500 CFj

$165,000 CFj

$174,000 CFj

$190,500 CFj
 $190,500 CFj

$202,000 CFj

$203,300 CFj

$205,700 CFj

$209,500 CFj

$2,680,000 + $220,150 = $2,900,150 CFj

OUTPUT 11.77%
 5 6 7 8
- - - -
$ 190,500 $ 202,000 $ 203,300 $ 205,700
$ - $ - $ - $ -
$ 190,500 $ 202,000 $ 203,300 $ 205,700
0.5428 0.4803 0.4251 0.3762
$ 103,396 $ 97,024 $ 86,415 $ 77,376
0.5935 0.5346 0.4817 0.4339
$ 113,052 $ 107,997 $ 97,921 $ 89,259

13

¬
I/YR
CST
IRR/YR
CFj

11.77%
See class note
 9 10 NPV
- -
$ 209,500 $ 220,150
$ - $ 2,680,000
$ 209,500 $ 2,900,150
0.3329 0.2946
$ 69,739 $ 854,350 -$ 144,402
0.3909 0.3522
$ 81,899 $ 1,021,388 $ 98,923
#VALUE!
 45000 200,000 50,000
10 6% 10
6% ($331,203.92) 10 8.50%
($741,754.97)

150000
9% 1000000
10 ($355,104.55) 25
11% ($73,608.09)

90000
9%
7 ($828,039.12)
200000
9%
250,000 5
9.00% ($307,724.79)
9 ($3,255,259.11)

2000000
7%
5 ($2,805,103.46)