In making single-asset real estate investment decisions, the first pass often involves calculating a series of returns, ratios, and multipliers. Which of the following is often cited as a limitation associated with this type of analysis?

Question

Quizplus · Accepted Answer

Many traditional return ratios like IRR, NPV, and cash-on-cash returns focus only on the first year's cash flows and fail to incorporate cash flows beyond the initial period. This limitation can lead to incomplete analysis and misinterpretation of the investment's true potential.

In Making Single-Asset Real Estate Investment Decisions, the First Pass