Finance
What is 'net present value' (NPV) analysis in Delaware real estate investment?
AThe current assessed value of a property before improvements are made
BA discounted cash flow method comparing the present value of all expected future cash flows from an investment to the initial investment cost — positive NPV means the investment exceeds the required return✓ Correct
CThe net value of a property after paying all outstanding mortgages
DThe present value of the net rent received after expenses
Explanation
NPV analysis discounts all projected future cash flows (NOI, reversion/sale proceeds) to their present value using the required discount rate, then subtracts the initial investment. Positive NPV = investment exceeds required return (invest); Negative NPV = investment falls short (do not invest); Zero NPV = investment exactly meets required return. Delaware commercial real estate investors use NPV and IRR (internal rate of return) for investment decisions.
Related Delaware Finance Questions
- What is 'points' in Delaware mortgage financing?
- In Delaware, what does 'equity' in real estate mean?
- What is a 'junior mortgage' in Delaware?
- Discount points paid at loan closing serve what purpose?
- The Truth in Lending Act (TILA) requires lenders to disclose the:
- What is a 'graduated payment mortgage' (GPM) in Delaware?
- What is the function of Ginnie Mae (Government National Mortgage Association) in Delaware mortgage markets?
- What does the annual percentage rate (APR) on a mortgage loan represent?
Practice More Delaware Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Delaware Quiz →