Okay, so we're going to be looking at, once we do a little more review but

not much, discounted cash flow evaluation methods for

general finance projects and real estate finance projects.

And we're always going to be using the present value of cash flows,

cash flows translated back to time T = 0.

And discount rates or interest rates,

which you've seen as r, maybe you've seen ROCC which stands for

for opportunity cost of capital, etc, okay?

In real estate finance, the two most important discounted cash flow

methods are the net present value method and the internal rate of return method.

And before we get started on both of those methods, I'd like to

go over several key points that apply to both methods.

I have found that some of my students and

entry level employees typically get these three things screwed up sometimes.

So let me go over them with you.

Again, as I've said three or four times already, can't emphasize it enough,

we always want to evaluate a project for one participant at a time.

And we're only going to consider cash inflows and

outflows to or from this project for this player.

We're in general using the DCF methods, we're not going to care about

what they may have in the bank, as long as it stays there.