From the course: Pre-investing: Before Investing in Real Estate

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NPV vs. IRR

NPV vs. IRR - Microsoft Excel Tutorial

From the course: Pre-investing: Before Investing in Real Estate

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NPV vs. IRR

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- Hey guys, let's look at the examples we visited earlier again. The eight investments where we're making $200 of an investment, and then we're getting a total of $1,000 back over a ten year period. But, the difference here is each one of the investments, the $1,000, come in different amounts in different times. So, some of them are spread out more, and some are spread less and it'll only come in two years, right? With those we remember we saw that investment five was the best option; was the most efficient at returning the investment to the investor. When we look at the other measures, the Net Present Value at a discount rate of 8%, we see that the NPV is consistent with the IRR here in this case. That it is the most efficient at returning that capital. Now, when we look at the Cash Multiple, they all look exactly the same. And, that was by design, right? Because, you're getting the same amount of total cash back. $1,000 for your $200 investment. 1,000 over 200 is five X. So, you…

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