Real Estate Division

CPD 151 - Real Estate Finance Basics

Pre-requisite: none; it is assumed that students are familiar with basic algebra and mathematics (e.g., Math 12).

This three lesson course provides an introduction to the mathematics of financial analysis, as it relates specifically to real estate. The course provides an overview of how real estate loans and investments may be structured and then delves into the necessary concepts and calculations: simple and compound interest; interest rate equivalency; present value and future value analysis; annuities; mortgage analysis; sinking funds; internal rate of return and net present value. The course will introduce the mathematical formulas and then illustrate how problems are solved using the HP10BII/II+ financial calculator. Microsoft Excel’s financial functions are also introduced.

Lesson 1: Finance Fundamentals I

  • Instructor's Comments
  • Math Formulas and Financial Calculators
  • Interest Rates
  • Illustrations of Compound Interest Calculations
  • Equivalent Interest Rates
  • Summary
  • Review and Discussion Questions

Lesson 2: Finance Fundamentals II

  • Instructor's Comments
  • Constant Payment Mortgages
  • Annuities: Introducing Payments into Financial Calculations
  • Analysis of Constant Payment Mortgages
  • The Mathematics of Annuities
  • Interest Only Loans
  • Summary
  • Review and Discussion Questions
  • Appendix 2.1: Six Functions of a Dollar

Lesson 3: Finance Applications

  • Instructor's Comments
  • Future Values and Ordinary Simple Annuities
  • Future Values and Ordinary General Annuities
  • Future Values and Irregular Cash Flows
  • Investment Analysis: Net Present Value and Internal Rate of Return
  • Summary 
  • Review and Discussion Questions

Afterword: The Final Quiz

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