Discounted Cash Flow Valuation

1. Prepare a discounted cash flow spreadsheet analysis reporting Net Present Value (NPV) and
Internal Rate of Return (IRR) results for the potential investor who wants to purchase in her
individual name. Assume the investor has sufficient cash to cover any cash shortfalls during
the life of the investment. You can assume that if the property is purchased, it will be settled
on 30th June 2016.
2. Advise the investor whether the investment property should be purchased (on the results of the
base case) and why or why not. What are the Net Present Value and Internal Rate of Return
results if the investor purchased the property through a private company? Explain whether the
investor should purchase the property through a private company.
3. Conduct a sensitivity analysis utilizing two (only two) major critical variables that might
impact on Net Present Value. Explain the assumptions, results and limitations of your analysis
to the potential investor.



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