Course Description and Outline

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
    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
    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
    Review and Discussion Questions

  • AFTERWORD: The Final Quiz

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