A Pedagogical Tool to Assist in Teaching Real Estate Investment Risk Analysis

William Weaver and Stuart Stetson

Journal of Real Estate Practice and Education, 2004, vol. 7, issue 1, 43-52

Abstract: This paper presents a simple Excel model that provides measures of the standard deviation of forecasted internal rate of return (IRR) given traditional data inputs such as annual cash flows, terminal values and equity. The model first calculates IRR using traditional discounted cash flow methods and then provides heuristic estimates of variability measured in terms of “high,” “low” and “most likely” values. It also provides an actual measurement of risk in terms of mean and standard deviation and upper and lower quartiles, along with a graphical presentation of various risk parameters. The only additional analysis required is an estimation of the variability of periodic cash flows and the terminal value of the investment.

Date: 2004
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10835547.2004.12091601 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rjrpxx:v:7:y:2004:i:1:p:43-52

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rjrp20

DOI: 10.1080/10835547.2004.12091601

Access Statistics for this article

Journal of Real Estate Practice and Education is currently edited by Reid Cummings

More articles in Journal of Real Estate Practice and Education from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().