FINA 210 Lecture Notes - Lecture 7: Capital Cost Allowance, Earnings Before Interest And Taxes, Income Statement
25 Apr 2016
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Document Summary
Based on the real estate income statement, (similar to the traditional income statement, but with different terms). Example: sales is replaced with potential gross income . Payback period (pb: the number of years or period to recover your investment costs, if the investment cost (cash out ow) is ,000 and the cash in ow is ,000 per year for 5 years, the pb is 3 years. Note: both seller and buyer knows the effective gross income and seller wants a high price (high. Gim) and buyer wants a low price (low gim). This is a multiplier or number of times. Note: both seller and buyer know the net operating income and seller wants a high price (high. Nim) and buyer wants a low price (low nim). This is a rate of return and not a multiplier, as the name suggests. Note: both seller and buyer know the net operating income and the seller wants a high price (low.
