REE 3043 Chapter 8 Q
Given the following information, what is the potential gross income? Property: 4 office units; Contract Rents per unit: $2500 per month ; Vacancy and collection losses: 15%; Operating expenses: 35%; CAPEX: 10%: $100,000 $135,000 $102,000 $120,000
$120,000
Given the following information, what is the effective gross income? Property: 4 office units; Contract Rents per unit: $2500 per month; Vacancy and collection losses: 15%; Operating expenses: 35%; CAPEX: 10%: $100,000 (not) $135,000 $102,000 $120,000
102,000
Calculate the capitalization rate given the following information? Sale Price: $950,000; Net Operating Income: $150,000; Potential Gross Income: $250,000: 15.80% 26.30% 6.33% not enough information
15.80
Calculate the capitalization rate given the following information? Sale Price: $950,000; Net Operating Income: $150,000; Potential Gross Income: $250,000: 15.80% 26.30% 6.33% not enough information
15.80%
The NOI is calculated by deducting all expenses and allowances from the property's potential gross income. True False
False
NOI is the net operating income produced by the property before debt service and income taxes are paid. -True -False
True
Types of expenses include: fixed expenses variable expenses reserve for replacements all of the above
all of the above
Which of the following would be considered a capital expenditure? hiring someone to repair a toilet building a guard station for the parking garage property taxes garbage removal
building a guard station for the parking garage
Investment value uses the expected cash flows and a discount rate of a typical market participant. true false
false
The capitalization rate found by dividing the NOI of a recently sold property by its selling price does not take into account any estimate of the property's future cash flows. True False
false
The equity dividend rate is obtained by dividing the before-tax cash flow by the overall value of the property. True False
false
The final value estimate produced by one approach is called: adjusted final sale price reconciled estimate of value indicated value final estimate of value
indicated value
Which of the following would be considered a capital expenditure? hiring someone to repair a toilet building a guard station for the parking garage property taxes garbage removal
parking garage
The methodology of appraisal differs from that of investment analysis primarily regarding: type of debt assumed in the analysis length of holding period analyzed (not) use of direct capitalization point of view and types of data used
point of view and types of data used
Which of the following type of properties probably would not be appropriate for income capitalization? apartment building shopping center farm warehouse public school
public school
Which of the following would not be considered a capital expenditure? -changing the locks for a new tenant (not) replacing the air conditioning system -(not) adding energy efficient windows -re-tiling the lobby
re-tilling the lobby
Discount rates are the largest component of most capitalization rates. True False
true
In valuation using the income capitalization approach, the present worth of a future income stream is estimated. true false
true
Market value uses the expected cash flows and a discount rate of the typical market participant. True False
true
The mortgage constant can be thought of as the capitalization rate of debt financing. true false
true
Given the following information, what is the potential gross income? Property: 4 office units; Contract Rents per unit: $2500 per month ; Vacancy and collection losses: 15%; Operating expenses: 35%; CAPEX: 10%: (not) $100,000 $135,000 $102,000 $120,000
120
Given the following information, what is the net operating income assuming below-line treatment? Property: 4 office units; Contract Rents per unit: $2500 per month; Vacancy and collection losses: 15%; Operating expenses: 35%; CAPEX: 10%: $95,000 (not) $102,000 $48,000 $60,000
60,000
Reserves for replacements and other nonrecurring expenses are allowances that reflect: the annual depreciating of the building (not) the annual depreciation of the long-lived components of the building the annual depreciation or appreciation of the entire property the annual depreciation of the short-lived components of the building and expenses that occur only occasionally
?
The preferred method to estimate Ro, if good price, income, and expense data are available, is mortgage-equity analysis. True False
False
The actual rent amount paid by the tenant is referred to the: market rent (not) agreed rent contract rent flex rent
contract rent
The Equity Capitalization Rate is equal to NOI divided by value in equity. true false
false
A lease that includes a clause allowing for an 8% per year rent increase is referred to as a: (not) general inflation lease tenant sales lease straight lease step up lease
step up lease
The allowance known as the reserve for replacements and other nonrecurring expenses is estimated by annualizing all the costs of periodically replacing the components of improvement that depreciate faster than the building itself, such as carpeting. true false
true
The fundamental equation used in the income capitalization approach is value equals income divided by the rate. True False
true
Dividing the equity income (BTCF) by equity dividend rate (Re), yields the: value of the equity (not) outstanding mortgage balance (not) net operating income equity dividend ratio
value
