IAAO 102 CHAPTER 5 REVIEW
QUESTIONS AND ANSWERS
If the land capitalization rate in straight line capitalization (including the effective tax rate) i
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
s 9%, and the remaining economic life of the improvement is 25 years, the building capitali
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
zation rate is - ans-13% . sw sw sw sw sw
In straight-
sw
line capitalization, ________________________is received in equal amounts during the
sw sw sw sw sw sw sw sw sw
economic life of the improvement. - ans-recapture
sw sw sw sw sw sw
Straight-
line capitalization assumes a ______________________income stream during the remai
sw sw sw sw sw sw sw sw
ning economic life of the improvements. - ans-declining
sw sw sw sw sw sw sw
Straight-line capitalization is best utilized when the property has: - ans-
sw sw sw sw sw sw sw sw sw sw
1. Income is expected to decline over the remaining economic life
sw sw sw sw sw sw sw sw sw sw sw
2. Discount (or overall yield) is earned on nondepreciated balance of investment
sw sw sw sw sw sw sw sw sw sw sw sw
3. Recapture is received in equal amounts during remaining life of improvements
sw sw sw sw sw sw sw sw sw sw sw
The building residual technique should be used when: - ans-
sw sw sw sw sw sw sw sw sw
1. Land value supported by market data is known
sw sw sw sw sw sw sw sw sw
2. Improvement is not new
sw sw sw sw sw
3. Improvement is not adequate for site
sw sw sw sw sw sw sw
4. Vacant land sales are available
sw sw sw sw sw
The land residual technique should be used when: - ans-
sw sw sw sw sw sw sw sw sw
1. Improvements are adequate in condition and suitability to the site
sw sw sw sw sw sw sw sw sw sw sw
2. Land consists of a large parcel with no comparable property available
sw sw sw sw sw sw sw sw sw sw sw sw
3. Land sales are not available
sw sw sw sw sw sw
4. Building is new, and the proper use and cost are known
sw sw sw sw sw sw sw sw sw sw sw
The land capitalization rate is composed of what components? - ans-
sw sw sw sw sw sw sw sw sw sw
1. Discount rate (or overall vield rate)
sw sw sw sw sw sw sw
2. Effective tax rate
sw sw sw
The building capitalization rate is composed of what components? - ans-
sw sw sw sw sw sw sw sw sw sw
1. Discount rate (or overall yield rate)
sw sw sw sw sw sw sw
2. Recapture rate
sw sw sw
QUESTIONS AND ANSWERS
If the land capitalization rate in straight line capitalization (including the effective tax rate) i
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
s 9%, and the remaining economic life of the improvement is 25 years, the building capitali
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
zation rate is - ans-13% . sw sw sw sw sw
In straight-
sw
line capitalization, ________________________is received in equal amounts during the
sw sw sw sw sw sw sw sw sw
economic life of the improvement. - ans-recapture
sw sw sw sw sw sw
Straight-
line capitalization assumes a ______________________income stream during the remai
sw sw sw sw sw sw sw sw
ning economic life of the improvements. - ans-declining
sw sw sw sw sw sw sw
Straight-line capitalization is best utilized when the property has: - ans-
sw sw sw sw sw sw sw sw sw sw
1. Income is expected to decline over the remaining economic life
sw sw sw sw sw sw sw sw sw sw sw
2. Discount (or overall yield) is earned on nondepreciated balance of investment
sw sw sw sw sw sw sw sw sw sw sw sw
3. Recapture is received in equal amounts during remaining life of improvements
sw sw sw sw sw sw sw sw sw sw sw
The building residual technique should be used when: - ans-
sw sw sw sw sw sw sw sw sw
1. Land value supported by market data is known
sw sw sw sw sw sw sw sw sw
2. Improvement is not new
sw sw sw sw sw
3. Improvement is not adequate for site
sw sw sw sw sw sw sw
4. Vacant land sales are available
sw sw sw sw sw
The land residual technique should be used when: - ans-
sw sw sw sw sw sw sw sw sw
1. Improvements are adequate in condition and suitability to the site
sw sw sw sw sw sw sw sw sw sw sw
2. Land consists of a large parcel with no comparable property available
sw sw sw sw sw sw sw sw sw sw sw sw
3. Land sales are not available
sw sw sw sw sw sw
4. Building is new, and the proper use and cost are known
sw sw sw sw sw sw sw sw sw sw sw
The land capitalization rate is composed of what components? - ans-
sw sw sw sw sw sw sw sw sw sw
1. Discount rate (or overall vield rate)
sw sw sw sw sw sw sw
2. Effective tax rate
sw sw sw
The building capitalization rate is composed of what components? - ans-
sw sw sw sw sw sw sw sw sw sw
1. Discount rate (or overall yield rate)
sw sw sw sw sw sw sw
2. Recapture rate
sw sw sw
