How it works
Write the cash list first. Then decide what the page is measuring.
- Open with the pick in one sentence.
- Show the gap in today's dollars and in year-one cash.
- List the rate and the extras you used.
- Name the flip risk.
- Close with the next landlord question.
Formula in words. Memo = pick + gap + assumptions + flip + next ask.
| Input | Meaning |
|---|---|
| Pick | Which option and why |
| Gap | NPV and year-one cash |
| Assumptions | Rate and extras |
| Flip | What would change the pick |
| Ask | The next request |
Worked example
Here is a teaching sample. It is not customer data and not a result from a live client.
Lease A start rent$42,500
Lease B start rent$39,525
Discount rate8%
Sample NPV A$371,753
| Metric | Lease A | Lease B |
|---|---|---|
| Start rent | $42,500 | $39,525 |
| Year-1 extras | $8,700 | $9,309 |
| Year-1 credit | $16,000 | $8,800 |
| Sample NPV | $371,753 | $360,556 |
| Year | Rent | Extras | Credit | Cash out | Value today |
|---|---|---|---|---|---|
| Year 1 | $42,500 | $8,700 | $16,000 | $35,200 | $32,593 |
| Year 2 | $43,775 | $8,961 | $0 | $52,736 | $45,213 |
| Year 3 | $45,088 | $9,230 | $0 | $54,318 | $43,119 |
| Year 4 | $46,441 | $9,507 | $0 | $55,948 | $41,123 |
| Year 5 | $47,834 | $9,792 | $0 | $57,626 | $39,219 |
| Year 6 | $49,269 | $10,086 | $0 | $59,355 | $37,404 |
| Year 7 | $50,747 | $10,389 | $0 | $61,136 | $35,672 |
| Year 8 | $52,269 | $10,701 | $0 | $62,970 | $34,021 |
| Year 9 | $53,837 | $11,022 | $0 | $64,859 | $32,446 |
| Year 10 | $55,452 | $11,353 | $0 | $66,805 | $30,944 |
| Sample NPV | — | — | — | — | $371,753 |
How to read the sample
Sample NPV for Memo sample is about $371,753. A second path lands near $360,556. That gap is a talking point, not a promise.
Year notes for Memo sample
- Year 1 of Memo sample has rent of $42,500.
- Shared building cost is $8,700.
- A credit of $16,000 lowers the cash you pay that year.
- Cash out this year is about $35,200. Year one is the cash the memo must not hide.
- Later cash gets a shrink for time. At 8 percent, year 1 is worth about $32,593 today.
- Next, year 2 rent is $43,775.
- CAM, which is a shared building cost, is $8,961.
- There is no credit in this year.
- You pay about $52,736 this year after extras and credits. Year two is the first clean bill.
- Time shrinks later cash. At 8 percent, year 2 is worth about $45,213 today.
- Then year 3 rent is $45,088.
- Extras for the building come to $9,230.
- Credits skip this year.
- The net cash this year is about $54,318. The bump is an assumption to name.
- Waiting has a price. At 8 percent, year 3 is worth about $43,119 today.
- After that, year 4 rent is $46,441.
- The shared building cost this time is $9,507.
- No extra credit shows up this year.
- Cash out this year is about $55,948. Later years feed the NPV gap.
- Later cash gets a shrink for time. At 8 percent, year 4 is worth about $41,123 today.
- In year 5 of Memo sample, rent is $47,834.
- Shared building cost is $9,792.
- There is no credit in this year.
- You pay about $57,626 this year after extras and credits. The last year proves the term you used.
- Time shrinks later cash. At 8 percent, year 5 is worth about $39,219 today.
- Year 6 of Memo sample has rent of $49,269.
- CAM, which is a shared building cost, is $10,086.
- Credits skip this year.
- The net cash this year is about $59,355. Keep this later year in the sum for the sample.
- Waiting has a price. At 8 percent, year 6 is worth about $37,404 today.
- Next, year 7 rent is $50,747.
- Extras for the building come to $10,389.
- No extra credit shows up this year.
- Cash out this year is about $61,136. The row still belongs in the sum for the long path.
- Later cash gets a shrink for time. At 8 percent, year 7 is worth about $35,672 today.
- Then year 8 rent is $52,269.
- The shared building cost this time is $10,701.
- There is no credit in this year.
- You pay about $62,970 this year after extras and credits. Keep this later year in the sum for the long path.
- Time shrinks later cash. At 8 percent, year 8 is worth about $34,021 today.
- After that, year 9 rent is $53,837.
- Shared building cost is $11,022.
- Credits skip this year.
- The net cash this year is about $64,859. The row still belongs in the sum for the long path.
- Waiting has a price. At 8 percent, year 9 is worth about $32,446 today.
- In year 10 of Memo sample, rent is $55,452.
- CAM, which is a shared building cost, is $11,353.
- No extra credit shows up this year.
- Cash out this year is about $66,805. Keep this later year in the sum for the long path.
- Later cash gets a shrink for time. At 8 percent, year 10 is worth about $30,944 today.
Add those year values. The sample NPV for Memo sample is about $371,753. This is a teaching sample, not a client result.
Trusted sources
These are public references. They are not endorsements and not client results.