Real Estate Investment Analysis - Discounted Cash Flow (DCF)

 

Notes:

• What problem does it solve?
  This code calculates the net present value (NPV) of future cash flows to help investors assess the value of an investment.

• How can businesses or users benefit from customizing the code?
  It helps users evaluate the long-term profitability of a property by discounting future cash flows back to their present value.

• How can businesses or users adopt the solution further, if needed?
  Users can modify the discount rate or cash flow assumptions to tailor the analysis to different types of properties or investment strategies.

Actual Python Code:

class DCFAnalysis:

    def __init__(self, cash_flows, discount_rate):

        self.cash_flows = cash_flows

        self.discount_rate = discount_rate

    

    def npv(self):

        npv = 0

        for i, cash_flow in enumerate(self.cash_flows):

            npv += cash_flow / (1 + self.discount_rate) ** (i + 1)

        return npv

# Example usage

cash_flows = [50000, 55000, 60000, 65000, 70000]  # projected cash flows over 5 years

discount_rate = 0.1  # 10% discount rate

dcf = DCFAnalysis(cash_flows, discount_rate)

print(f"Net Present Value (NPV): ${dcf.npv():.2f}")