标题: Sinking fund- Real Estate Investment Analysis [打印本页] 作者: chunty 时间: 2011-7-11 19:35 标题: Sinking fund- Real Estate Investment Analysis
Does somebody have a good explanation of what, conceptually, the sinking fund component in the band of investment method of calculating capitalization rates represents? I understand the calculation but can't really figure out why it is included.
Much appreciated,
Mike作者: ayodayo 时间: 2011-7-11 19:35
you need 1 $ in Principal and interest in the future at the end of the loan.
you need to save money every month - to accumulate to that 1$ at the end of the loan.
that's what the Sinking Fund is calculating.
If you had the level Payment for the Mortgage -> Level Payment * 12 / Loan Amount will give you the same number as
sinking Fund Factor * 12 (Monthly converted to Annual) + Interest rate on Loan
CP作者: genuinecfa 时间: 2011-7-11 19:35
Like I said, I understand the calculation, but conceptually I am not sure why a premium is added to the morgate rate.
