From the course: Pre-investing: Before Investing in Real Estate
Unlock this course with a free trial
Join today to access over 23,400 courses taught by industry experts.
Measuring magnitude: Cash multiple - Microsoft Excel Tutorial
From the course: Pre-investing: Before Investing in Real Estate
Measuring magnitude: Cash multiple
- All right, now let's look at a concept called the cash multiple. This is something that is frequently used in combination with the internal rate of return. And it's actually a very, very simple concept. The idea is if you put in one dollar into an investment, how much do you get back for every dollar that you put in? So let's look at an example here where two projects give a two x multiple, okay, cash multiple. Both investments double your money. So do they give you the same return? Now, the two x means, you put a dollar in, you get two dollars back. So you get your original dollar, plus you get a dollar of profit. So that's how you get a two x multiple. And basically, it means doubling your money. So if it was a one x multiple, it means you just got your original investment back, okay? So now we have two projects that both have a 2.0 cash multiple. That means they both double your money. So are the projects the same? Well, if you remember from the internal rate of return and our…
Practice while you learn with exercise files
Download the files the instructor uses to teach the course. Follow along and learn by watching, listening and practicing.
Contents
-
-
-
-
-
-
-
-
(Locked)
What makes a good investment?1m 48s
-
(Locked)
Discounted cash flow and the net present value (NPV)5m 37s
-
(Locked)
Discount rate2m 42s
-
(Locked)
NPV demonstration7m 34s
-
(Locked)
Measuring efficiency: Internal rate of return (IRR)2m 34s
-
(Locked)
IRR demonstration4m 24s
-
(Locked)
Measuring magnitude: Cash multiple1m 58s
-
(Locked)
How to use the measures6m 3s
-
(Locked)
NPV vs. IRR4m 51s
-
(Locked)
The terminal value of an indefinitely held rental5m 53s
-
(Locked)
Investment yields and capitalization rates8m 38s
-
(Locked)
Measures of return summary7m 49s
-
(Locked)
-
-
-