2.1 What is a Sensitivity Table ✅
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Questions and Answers

What happens to real estate values when cap rates go down?

  • It depends on other factors
  • They remain unchanged
  • They go down
  • They go up (correct)
  • What happens to the levered IRR of a deal when cap rates go down?

  • It remains unchanged
  • It goes up (correct)
  • It goes down
  • It fluctuates randomly
  • What does a one-sided sensitivity table test?

  • The impact of changing one assumption on the model's single output
  • The impact of changing one assumption on the model's multiple outputs (correct)
  • The impact of changing two assumptions on the model's single output
  • The impact of changing two assumptions on the model's single output
  • What does a two-sided sensitivity table test?

    <p>The impact of varying two key assumptions in a deal at any given time</p> Signup and view all the answers

    What does the gray line in a sensitivity table represent?

    <p>Base case assumptions</p> Signup and view all the answers

    What is being tested in a one-sided sensitivity table?

    <p>One assumption variable on outputs of the model</p> Signup and view all the answers

    What is being tested in a two-sided sensitivity table?

    <p>The impact of changing two assumptions on the model's single output</p> Signup and view all the answers

    Where should sensitivity tables be built in a cash flow model?

    <p>On the same page as assumptions</p> Signup and view all the answers

    What does the gray line represent in the sensitivity table according to the text?

    <p>Base case</p> Signup and view all the answers

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