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What is the expected annual income of a property that recently sold for $2,365,300 and for which the buyers indicated that they used an overall capitalization rate (RO) of 8.5%?

$201,050.50

A property has a net operating income of $25,000, and the capitalization rate used in the market is 10%. What is the indicated value?

$250,000

The subject property is expected to generate net operating income (NOI) over the next five years as shown in the following table. The resale of the property is estimated at $5 million at the end of the fifth year. The closing costs are estimated at 5% of the sale price. The discount rate is 9.5%. Cash flows are at the end of each year. What is the value of this investment? Round your answer to the nearest $1,000.

$4,327,000

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year 1 - 15% year 2 - 5%

A property has a net income of $35,000 per year. The operating expense ratio is 36%. The vacancy and collection loss is estimated to be 5%. What is the effective gross income?

$54,687.50

The subject property has a level income of $59,627.5. In the mortgage market for this type of property, the best rate available is 8.5% per year with monthly payments, a 25 year amortization, and a maximum 75% loan-to-value. The equity capitalization rate is 12.5%. What is the market value? (Band of investment technique)

$627,658

The subject is located in a market where lenders are making commercial loans on properties like the subject at 8.5% per year with monthly payments and a 20 year amortization with a 75% loan to value ratio. The equity dividend rate in this market is 10%. What is the overall capitalization rate?

10.31%

A property sold for $555,000. The buyer anticipated that the potential gross income (PGI) would be $93,000, the vacancy would be 5%, and expenses would be 35% of the effective gross income (EGI) in the year after purchase. What is the overall capitalization rate (RO)? Round your answer to the nearest 0.5%.

10.5%

What is the internal rate of return (IRR) on an investment with the following cash flows? (TABLE)

11.5%

If the overall capitalization rate is 9.5%, the mortgage constant is 7.755%, and the loan-to-value ratio is 80%, what is the equity dividend rate (RE)?

16.48%

A property sold for $2,345,000. The net operating income (NOI) is $255,000, and the expenses are 35% of the effective gross income (EGI). What is the effective gross income multiplier (EGIM)?

5.98

A property recently sold for $444,000 (cash equivalent) and had $65,700 in potential gross income (PGI) for the following year. The expenses were 33% of the effective gross income (EGI). The vacancy and collection losses were estimated at 5%. What is the overall capitalization rate (RO)?

9.42%

If the loan-to-value ratio is 75%, the mortgage capitalization rate (RM) is 10.55%, and the debt coverage ratio (DCR) is 1.25, what is the implied capitalization rate based on the debt coverage formula (underwriter's method)?

9.90%

which of the following lease data items is NOT essential to value analysis

ALL OF THE ABOVE

The principle of ________ is the basis of the income capitalization approach.

Anticipation

Which economic principle is fundamental to the income capitalization approach?

Anticipation

Which of the following would be considered a variable expense?

Raw materials

Which of the following is not a variable expense?

Real Estate Taxes

Which of the following is true about the expense stop?

The expense stop restricts the landlord from spending more than is appropriate.

An overall capitalization rate is:

The ratio of one year's income to value for the entire property

Choose the term below that best describes the rent that considers any concessions offered to tenants to entice them to sign a lease.

effective rent

How does a projected decline in value affect capitalization rates when income remains unchanged?

it lowers them

Potential Gross Income (PGI) is

the amount of money the property would earn if it is fully occupied and there were no collection losses

What are the primary uses of discounted cash flow analysis?

to calculate the present value and rate of return

The overall capitalization rate (RO) is calculated by

Dividing the NOI by the sale price

Potential gross income less vacancy and collection losses is known as:

Effective Gross Income

Effective gross income (EGI) less operating expenses and reserves is known as

Net Operating Income