REE4103 Exam 3 Questions With
Complete Answers
All are used in valuation of income-producing property except:
a. Rental rates
b. Operating expenses
c. Income taxes
d. Net leasable area - ANSWER Income Taxes
Capitalization is employed in the:
a. Cost approach
b. Market approach
c. Income approach - income properties
d. Income approach - residential properties - ANSWER Income approach -
income properties
A gross lease is one that:
a. Tenant pays for all operating expenses
b.Landlord pays for all operating expenses
c.Applies only to commercial properties
d. Rent rises with the cost of living - ANSWER b. The landlord pays for all
operating expenses
When estimating the market value of an income-producing property, the
appraiser will not consider:
a. Rental rates
b. Operating expenses
c. Income taxes
d. Net leasable area - ANSWER Income Taxes
In income capitalization, value is measured as the present worth of the: -
ANSWER net operating income + the reversion
Income capitalization techniques are not typically used in valuing: - ANSWER
Properties that do not generate Income
,The monthly rental being paid for a comparable rental property is called: -
ANSWER Contract rent
The procedure used to convert future benefits into present value is: - ANSWER
yield Capitalization (discount cash flow model)
When the landlord permits the tenant occupancy and use of the space each year
for a fixed amount of money, the lease is described as
A. fixed lease
B. triple net lease
C. gross lease
D. ground lease - ANSWER fixed or gross lease.
The basic formula for property valuation via income capitalization is:
A. NOI + interest
B. I + R
C. I/R
D. NOI / R - ANSWER Discount Cash Flow Analysis V=I/R
Which approach would probably be given the most weight in appraising a large
office building?
A. cost approach
B. cap approach
C. income Approach
D. sales comparison approach - ANSWER Income Approach
which principle of value best affirms that value is the present worth of expected
future benefits?
A. depreciation
B. anticipation
C. appreciation
D. substitution - ANSWER anticipation
The appraisal approach that normally would be most useful in valuing
investment property is the:
a. Sales comparison approach
b. income approach
c. cost approach
d. None of the above - ANSWER Income approach
, Value is said to be the present worth of future benefits. This defines the principle
of: - ANSWER Net Present Value
The income capitalization approach supports what two basic methodologies? -
ANSWER Direct Capitalization
Yield Capitalization
A property forecasted to produce $55,000 of gross income, and which sells for
$475,000 is said to have sold at a GIM of? - ANSWER V = I * IM = 475,,000
= 8.6
These models discount the expected future income from property with any
reversion value or sale proceeds to estimate the property's present (market)
value: - ANSWER Discount cash flows
A lease with the following annual payments: Year 1: $10,000 Year 2: $12,000
Year 3: $14,000 Year 4: $16,000; would be called what type of lease? - ANSWER
Variable or step-up
A lease which provides for rental changes annually tied to the consumer price
index is what kind of lease?
A. gross lease
B. triple net lease
C. reevaluation lease
D. Index lease - ANSWER Index Lease
A lease which requires the landlord and tenant to arbitrate the amount of the
lease upon the tenant exercising a lease extension option is what type of lease?
A. gross lease
B. triple net lease
C. reevaluation lease
D. Index lease - ANSWER Reevaluation Lease
The Landlord pays for all the expenses in a:
A. gross lease
B. triple net lease
C. reevaluation lease
D. Index lease - ANSWER Gross lease
The Landlord pays for only the structural repairs in what type of lease?
Complete Answers
All are used in valuation of income-producing property except:
a. Rental rates
b. Operating expenses
c. Income taxes
d. Net leasable area - ANSWER Income Taxes
Capitalization is employed in the:
a. Cost approach
b. Market approach
c. Income approach - income properties
d. Income approach - residential properties - ANSWER Income approach -
income properties
A gross lease is one that:
a. Tenant pays for all operating expenses
b.Landlord pays for all operating expenses
c.Applies only to commercial properties
d. Rent rises with the cost of living - ANSWER b. The landlord pays for all
operating expenses
When estimating the market value of an income-producing property, the
appraiser will not consider:
a. Rental rates
b. Operating expenses
c. Income taxes
d. Net leasable area - ANSWER Income Taxes
In income capitalization, value is measured as the present worth of the: -
ANSWER net operating income + the reversion
Income capitalization techniques are not typically used in valuing: - ANSWER
Properties that do not generate Income
,The monthly rental being paid for a comparable rental property is called: -
ANSWER Contract rent
The procedure used to convert future benefits into present value is: - ANSWER
yield Capitalization (discount cash flow model)
When the landlord permits the tenant occupancy and use of the space each year
for a fixed amount of money, the lease is described as
A. fixed lease
B. triple net lease
C. gross lease
D. ground lease - ANSWER fixed or gross lease.
The basic formula for property valuation via income capitalization is:
A. NOI + interest
B. I + R
C. I/R
D. NOI / R - ANSWER Discount Cash Flow Analysis V=I/R
Which approach would probably be given the most weight in appraising a large
office building?
A. cost approach
B. cap approach
C. income Approach
D. sales comparison approach - ANSWER Income Approach
which principle of value best affirms that value is the present worth of expected
future benefits?
A. depreciation
B. anticipation
C. appreciation
D. substitution - ANSWER anticipation
The appraisal approach that normally would be most useful in valuing
investment property is the:
a. Sales comparison approach
b. income approach
c. cost approach
d. None of the above - ANSWER Income approach
, Value is said to be the present worth of future benefits. This defines the principle
of: - ANSWER Net Present Value
The income capitalization approach supports what two basic methodologies? -
ANSWER Direct Capitalization
Yield Capitalization
A property forecasted to produce $55,000 of gross income, and which sells for
$475,000 is said to have sold at a GIM of? - ANSWER V = I * IM = 475,,000
= 8.6
These models discount the expected future income from property with any
reversion value or sale proceeds to estimate the property's present (market)
value: - ANSWER Discount cash flows
A lease with the following annual payments: Year 1: $10,000 Year 2: $12,000
Year 3: $14,000 Year 4: $16,000; would be called what type of lease? - ANSWER
Variable or step-up
A lease which provides for rental changes annually tied to the consumer price
index is what kind of lease?
A. gross lease
B. triple net lease
C. reevaluation lease
D. Index lease - ANSWER Index Lease
A lease which requires the landlord and tenant to arbitrate the amount of the
lease upon the tenant exercising a lease extension option is what type of lease?
A. gross lease
B. triple net lease
C. reevaluation lease
D. Index lease - ANSWER Reevaluation Lease
The Landlord pays for all the expenses in a:
A. gross lease
B. triple net lease
C. reevaluation lease
D. Index lease - ANSWER Gross lease
The Landlord pays for only the structural repairs in what type of lease?
