Property Management
What is a 'net present value' (NPV) analysis in Illinois real estate investment?
ACalculating the current assessed value net of all liens
BA method that discounts all future cash flows to present value and subtracts the initial investment; positive NPV indicates value is created✓ Correct
CThe difference between net operating income and debt service
DAn appraisal method used for new construction only
Explanation
Net Present Value (NPV) analysis discounts all expected future cash flows (NOI minus debt service, plus reversion at sale) to their present value using a required rate of return. The initial investment is then subtracted.
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