There are two ways to appraise the cash flow; Traditional Methods and Modern Methods. It is important to carry out before commencing of construction works because 'Quantitative Data' is provided to help in decision making; whether to invest on this project.
Traditional methods are including payback period and the Average Annual Percentage Rate of Return (AA%RR). Modern methods are including Discounted Cash Flow (DCF), Net Present Value (NPV), and Internal Rate of return (IRR).
(source: Society for economic research and management, 2013)
I have learnt and apply in my assessment. In order to determine the profit and benefit made by developing the property, appropriate assumption on capital invested and income are made in the development plan.
In short, the way of calculation is easy and simple, it is helpful in the future; where I work on feasibility study for a development project or I invest for a property for myself. Other than this, I will also learn the modern method: Discounted cash flow to improve myself.
Society for economic research and management (2013) Theory of management [online]. Available from: http://quantri.vn/dict/details/268-thoi-gian-hoan-von-du-an-pp--payback-period [Accessed 21 July 2014]