Feasibility Study: Technical Notes & Discussion
Feasibility study is the assessment, analysis and evaluation of a planned project to determine if it is technically feasible within the estimated cost and will be financially profitable. In this post we will discuss everything under the sun related to the feasibility study. Definition Feasibility study is an objective and rational analysis of the strengths and weaknesses of a project. A robust feasibility study covers five areas of feasibility – Technical, Economic, Legal, Operational, and Scheduling. You should note the words ‘objective’ and ‘rational’ in the definition. Feasibility study evaluates the potential success of any project; hence, objectivity is an
Excel Round Function: All You Need to Know
Excel Round Functions are used on daily basis by every Excel users. In this post we will discuss various Excel round functions, their syntaxes and uses. You can download the Excel workbook from the link at the bottom which contains the examples of Excel round functions. ROUND ROUNDUP ROUNDDOWN MROUND INT TRUNC CEILING FLOOR EVEN ODD FIXED Custom Excel Round Function Round Function: Rounds a number to specified decimal points Syntax: ROUND(number, num_digits) Where number is the number that you want to round, and ‘num_digits’ is the number of digits to which you want to round the number argument. Example:
Product Mix Optimization for Rental Properties
In the previous post on product mix optimization we learned to use Excel solver tool to optimize mixed-use real estate development. The main assumption in that post was that the products will be sold. Many readers asked a similar model where the properties will be held in rental income portfolio by the developer for long term. In this post we are going to explore how we can use Excel solver tool to optimize the mixed use real estate development where properties are held for rental income. If you are new to Excel Solver, you should refer back to the original
Cash Flow Forecast: Adjusting for Actuals
Cash flow forecast is an important component of the project finance modeling. Properly done cash flow forecast enables the firm to manage its fund and search for external funding in case of shortage. As the project progresses, we update the projections for the actuals up to current time period and need to re-forecast for the balance time period. Adjusting cash flow forecast for actuals and re-forecasting can be done by the following methods: Using Excel Forecast Formula Using Excel Trend Formula Using S-Curve Method In this post we will explore these three methods with an example. To understand the cash
How to explain IRR to anyone?
Explaining IRR (internal rate of return) to someone from non-finance background can be difficult. In the post on IRR, I explained the theory and calculation of IRR in much detail. However, many a time, when I talk to people from different disciplines I find it difficult to explain. Watch this video to know how, now, I explain IRR to almost anyone! Hope you will enjoy this video post, use the comment section below to let me know what do you think.
Real Estate Analyst Interview: Questions & Answers
Almost a year back I wrote the post about real estate analyst interview; it mostly covered the questions being asked. Many readers asked to provide the answer, but my job kept me busy and I was not able to write this post earlier. Thanks to Alexander Curry of Tarantino Properties, Inc, who wrote me an email providing in-depth feedback to the questions listed in that post. Because of Alex I decided to write this post. In this post I’m going to answer the 10 most commonly asked questions in a real estate analyst interview. If a project has zero NPV
Does it make financial sense to invest in a property for AirBnB listing Income?
The short answer is, yes, it does make financial sense to invest in a property for AirBnB listing Income, and the long answer will follow in this post. Be advised that this post is not about how to maximize profit or optimize your AirBnB listing. There are many authors who blog about this, and I would recommend Jasper Ribbers’ blog and book for this. In this post we will explore if does it make financial sense to invest in a property for AirBnB listing Income, and how to analyze it. As you know, AirBnB is an online marketplace for vacation
Can Equity IRR be lower than Project IRR?
The post about Project IRR and Equity IRR became one of the most commented posts on this blog. Apart from the comments, I still receive tons of email asking me what the other circumstances are when the equity IRR will be lower than project IRR. In that post we considered a simple project with one year gestation period and concluded that the equity IRR will be lower than the project IRR whenever the cost of debt exceeds the project IRR. We noted that it is the cost of debt and not the weighted average cost of capital, which impacts the
