5 Questions
What is the primary purpose of using a sensitivity table in investment analysis?
To assess the impact of changing key variables on investment performance
Why is the exit cap rate considered to have a significant impact on the IRR?
A small change in the exit cap rate results in a large change in property value, affecting the cash flow significantly.
In the context of sensitivity tables, why might an investor focus more on understanding factors affecting the exit cap rate than on rental growth rate?
The exit cap rate has a larger impact on property value and cash flow.
How does an increase in market interest rate affect the levered IRR?
It decreases
What is the impact of higher loan to value (LTV) and higher interest cost on the levered IRR?
It may still result in a higher IRR, depending on the overall increase in LTV and interest cost.
"Understanding Sensitivity Tables for Investors: Analyzing Interest Rate Impact" - Learn how investors use sensitivity tables to assess the risk of a deal by varying interest rates on loans. This quiz explores the practical application of sensitivity tables in evaluating investment risks.
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