Principals and Practices: Chapter 22

A duplex brings in $900 per month per unit and has $6,000 in annual expenses. What should an investor who wants a 10% return pay for the duplex?

$156,000

A seller was willing to sell her property, but only if she would net $150,100 from the sale after paying a 5% commission. What would be the selling price of the property to net $150,100?

$158,000

If the annual interest is $100 on a 3-year, straight interest-only note, and the interest rate on the note is 5% per year, what is the amount of the loan?

$2,000

Betty made a 20% profit on a residential lot she sold for $30,000. What did she pay for the property?

$25,000

Sandra, a real estate sales associate, found a buyer for a $200,000 house. The seller agreed to pay a 6% commission to the listing broker, half of which will be paid to Sandra's broker. Sandra is on a 50-50 split with her broker. What is the amount of her commission?

$3,000

Ted paid $480,000 for a duplex with a 10% capitalization rate. If both units in the duplex rented for the same amount, what is the net operating income (NOI) for the property?

$48,000

Of the following numbers, which is the smallest?

1/8

When dealing with equivalent amount, what is equivalent to 1/10?

10% or 0.10

A builder owns ½ acre of land with a front footage of 80 feet along the street. What is the depth of the land?

272.25 feet

Tom owns a 1,200 square foot, rectangular shaped ranch house that just barely fits on his 50 foot wide lot. If the house is 30 feet wide, what is the length of the house?

40 feet

How many linear feet are in 1 mile?

5,280 feet

Diane paid $600,000 for a six-unit apartment building. The gross income is $900 per month per unit, with annual expenses of $16,800 annually. What was the capitalization rate for this investment?

8%

Sam paid $500,000 for a five-unit apartment building. The gross income is $1,000 per month per unit, with annual expenses of $15,000 annually. What was the capitalization rate for this investment?

9%

What is the formula to determine the square footage of a room?

Area = Length x Width

How are numbers with decimals subtracted?

By lining up the decimals vertically

Sales agent Sally needs to convert square feet to square yards. How should she make the calculation?

Divide the number of square feet by 9.

Which of the following is not TRUE regarding calculators today?

Handheld financial calculators are expensive.

What is the formula to calculate the amount of a real estate commission?

I = P x R (Commission Income = Sales Price x % Rate)

What formula is used to calculate the NOI of an income producing property?

I = P x R (NOI = Property Value x Cap Rate)

Which of the following is TRUE regarding the history of calculators?

Real estate professionals used mortgage tables. Real estate professionals used desktop calculators. Real estate professionals would "run" the numbers on real estate transactions.

Which of the following items is not typically prorated?

Security deposits

What is the difference between semiannual, biannual, and biennial?

Semiannual means twice per year at 6-month intervals. Biannual means twice per year. Biennial means every two years.

What is a perimeter?

The distance measured around the outside of a geometric shape.