This page helps you evaluate how different purchase prices affect key financial metrics, allowing you to assess the profitability and return potential of your investment under various price scenarios.
Purchase Price Sensitivity Overview:
Purchase Price Slider: Adjust the slider to test different purchase prices. This allows you to see how changing the purchase price impacts the overall investment returns. The range spans from -60% to +60% of the Purchase price/Asking price, letting you explore multiple pricing options.
Key Metrics Display: As you adjust the purchase price, key metrics such as Internal Rate of Return (IRR), Cash on Cash Return, Total Potential Profit, and Equity Multiple are automatically updated to reflect how the new price would affect your returns. This real-time feedback helps you make informed decisions about potential offers.
Purchase Price Sensitivity Details:
This table provides a breakdown of how changes in the purchase price impact three crucial financial metrics:
IRR (Internal Rate of Return): The annualized return on your investment based on the adjusted purchase price.
Cash on Cash Return (CoC): The annual return on the cash invested, expressed as a percentage.
Total Profit: The total profit you can expect from the investment at each purchase price point.
The table includes a range of purchase prices from -20% to +20%, providing a comprehensive view of how both discounts and premiums affect the financial outcomes of the project.
Sensitivity Graph:
The graph on the right visually represents how the IRR and Cash on Cash Return change across different purchase prices. This allows you to quickly identify the most profitable price point and compare the effects of different pricing strategies.
Using the Insights:
IRR: A higher IRR indicates a better return on your investment. Use this to identify the purchase price that maximizes your returns.
Cash on Cash Return: Compare how your cash investment performs over time, helping you make decisions based on liquidity needs.
Total Profit: Ensure that the purchase price aligns with your target profit by examining how each price scenario affects the bottom line.
This tool is invaluable for making informed purchasing decisions and negotiating the best deal. Use the slider, table, and graph to identify the optimal price point for maximizing your returns while minimizing risk.