financial management rate of return

Also found in: Acronyms.

financial management rate of return (FMRR)

A method of evaluating the performance of a real estate investment,FMRR is a modified version of the internal rate of return tool.FMRR uses two different rates for its calculations:(1) the cost of capital rate to discount future negative cash flows back to the present (in other words,what would it cost you to borrow the money to cover losses in future years?) and (2) a specified reinvestment rate for compounding future positive cash flows to the end of the projection period (in other words, what if you took your profits and reinvested them at a certain rate,how would they grow?)

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
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