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However, when financing,
soft costs and selling expenses are introduced, the cash flows will change as
the property value changes. And we
always must discount the cash flows.
From an investor's perspective, it is the cash flows that produce his
return and determine the IRR that he can expect. Consequently, to find the indicated value that matches all of
the assumptions that you have specified, Analyst performs a
series of iterations, narrowing the value range each time. Finally, it finds the only indicated value
that will produce the cash flows necessary to meet the specified IRR and at
the same time conform to all of the other assumptions.
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