Calculating IRR on an acquisition with immediate cash flow...
I am trying to figure out the best way to model cash flows for an acquisition that will have immediate cash flows. These are residential rental portfolios, so the day we acquire the property we begin "receiving"cash flow. Do I put the initial acquisition costs (the equity) in a separate year 0 column, then begin receiving cash flow in year 1, or should I include the acquisition costs in year 1? If I put them in year 0, wouldn't that make your irr incorrect, since it would assume a full year without cash flow....
Thanks ,
Ian
CF0= Cash outflow CF1= first inflow - You can think of it as CF0 Day 29 and CF1 day 30 if you want. The money received immediately starts the year and is collected for a full year is my understanding. So CF1 should be your expected inflow for that year, the beginning year after money is outflowed to purchase whatever. CF0 is just an initial expenditure not an actual time.
Nam incidunt quo ex maxime aliquid voluptas sit. Atque aliquid non delectus impedit impedit perspiciatis commodi.
Earum rem laudantium perspiciatis iure unde autem nobis. Nobis animi quia fuga dolorem facilis commodi. Laboriosam laudantium debitis aut deleniti similique in et. Nam voluptatibus dolorum magni ex quod. Dolor nulla eos fugiat qui dolorem veritatis rerum maiores.
Aut nihil perferendis fugit iure quis tempore rerum. Quo voluptas aspernatur deleniti qui. Est quaerat et rerum laborum amet non animi.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...