CCIM CI 104 EXAM WITH COMBINED TESTS FOR SELF
ASSESSMENT WITH A SET OF QUESTIONS AND ACCURATE
ANSWERS ALREADY GRADED A+
M2Q3
The flexibility of pass-through taxation, limited liability and management structure make the
_________an increasingly popular choice as as ownership form.
Sole proprietorship
General partnersip
Corporation
Limited liability company - correct answer > Limited Liability Company
M5Q4
The pension fund has decided to discount the riskier cash flows at a higher discount rate to determine
investment value. They will discount the percentage rent at 18 percent and the base rent at 14 percent
in order to determine the investment value. Sale proceeds will be projected by capitalizing the year six
net operating income due to the percentage rent at 12 percent and the net operating income due to the
base rent at 10percent. Using this process how much should the fund pay for the center?
Year Total NOI. %Rent NOI = Base Rent NOI
1 $400k $40k $360k
2 $410k $41k $369K
3 $420k $42K $378K
4 $430k $43K $387K
5 $440k $44K $396K
6 $450k $45k $405K - correct answer > Because we are dealing with both a base rent and % rent, we will
have to make two T charts and then use tab 4 to solve for each NPV.
,For base rent, use periods 0-5 or $0-396k respectively. End sale proceeds are based on a 10% cap rate
for the base rent. =$4,050,000 (450,000/.1)
For % rent, use periods 0-5 or $0-44k respectively.End sale proceeds are based on a 12% cap rate for
the % rent. =$375,000(45000/.12)
Once you populate each table, based on the respective Discount rates of 14% for the base rent and
18% for the percentage rent.
Base rent NPV = $3,393,110
Percentage Rent NPV = $294,234
Total the pension fund would be willing to pay = $3,687,344 (Add both NPV's)
M1Q4
When an investor purchases an investment at a cap rate lower than the desired yield the investor
assumes:
-Net operating income and/or asset value will go down over the holding
period
-Net operating income and/or asset value will go up over the holding
period
-Net operating income and asset value will remain constant over the
holding period
-None of the above - correct answer > Net operating income and/or asset value will go up over the
holding period
M2Q1
, Sole Proprietorship may not be the ideal ownership form for real estate because of:
The associated personal liability
The difficulty in raising capital
The inability to diversify among multiple properties
All of the above - correct answer > All of the above
M2Q2
The advantage of General Partnership as an ownership form is:
Unlimited liability of the partners
All partners can carry on business for the partnership
The general partnership is a pass-through tax entity
Each partner owns interest in the partnership but not the property itself - correct answer > The general
partnership is a pass-through tax entity
M2Q4
In order to make a REIT (Real Estate Investment Trust) election a corporation must meet a number of
requirements including:
At least 90 percent of taxable income distributed to shareholders
At least 75 percent of income is from real estate investments
There are at least 100 shareholders
All of the above - correct answer > All of the above
M2Q5
ASSESSMENT WITH A SET OF QUESTIONS AND ACCURATE
ANSWERS ALREADY GRADED A+
M2Q3
The flexibility of pass-through taxation, limited liability and management structure make the
_________an increasingly popular choice as as ownership form.
Sole proprietorship
General partnersip
Corporation
Limited liability company - correct answer > Limited Liability Company
M5Q4
The pension fund has decided to discount the riskier cash flows at a higher discount rate to determine
investment value. They will discount the percentage rent at 18 percent and the base rent at 14 percent
in order to determine the investment value. Sale proceeds will be projected by capitalizing the year six
net operating income due to the percentage rent at 12 percent and the net operating income due to the
base rent at 10percent. Using this process how much should the fund pay for the center?
Year Total NOI. %Rent NOI = Base Rent NOI
1 $400k $40k $360k
2 $410k $41k $369K
3 $420k $42K $378K
4 $430k $43K $387K
5 $440k $44K $396K
6 $450k $45k $405K - correct answer > Because we are dealing with both a base rent and % rent, we will
have to make two T charts and then use tab 4 to solve for each NPV.
,For base rent, use periods 0-5 or $0-396k respectively. End sale proceeds are based on a 10% cap rate
for the base rent. =$4,050,000 (450,000/.1)
For % rent, use periods 0-5 or $0-44k respectively.End sale proceeds are based on a 12% cap rate for
the % rent. =$375,000(45000/.12)
Once you populate each table, based on the respective Discount rates of 14% for the base rent and
18% for the percentage rent.
Base rent NPV = $3,393,110
Percentage Rent NPV = $294,234
Total the pension fund would be willing to pay = $3,687,344 (Add both NPV's)
M1Q4
When an investor purchases an investment at a cap rate lower than the desired yield the investor
assumes:
-Net operating income and/or asset value will go down over the holding
period
-Net operating income and/or asset value will go up over the holding
period
-Net operating income and asset value will remain constant over the
holding period
-None of the above - correct answer > Net operating income and/or asset value will go up over the
holding period
M2Q1
, Sole Proprietorship may not be the ideal ownership form for real estate because of:
The associated personal liability
The difficulty in raising capital
The inability to diversify among multiple properties
All of the above - correct answer > All of the above
M2Q2
The advantage of General Partnership as an ownership form is:
Unlimited liability of the partners
All partners can carry on business for the partnership
The general partnership is a pass-through tax entity
Each partner owns interest in the partnership but not the property itself - correct answer > The general
partnership is a pass-through tax entity
M2Q4
In order to make a REIT (Real Estate Investment Trust) election a corporation must meet a number of
requirements including:
At least 90 percent of taxable income distributed to shareholders
At least 75 percent of income is from real estate investments
There are at least 100 shareholders
All of the above - correct answer > All of the above
M2Q5
