CCIM 101 - Financial Analysis
Questions And Correct Answers.
What's the biggest difference between cap rate and yield? - correct
answer
- Cap rate does not factor in eventual sale proceeds - yield
does. If there is a profit on the sale then yield will be higher than
cap rate.
Cap rate + growth = [XXXX]? - correct answer - Yield
True of false: Leasing commissions are included in Operating
Expense? - correct answer - False - they are included in
Cash Flow Before Taxes.
What is Net Present Value? - correct answer - NPV is the
difference between the present value of cash inflows and the
present value of cash outflows over time.
True of false: For commercial and investment properties, loan
costs paid at time period zero are deducted in full in the year
they are paid. - correct answer - False - they are amortized
over the full term of the loan. Any unamortized costs are
, expenses in the year the loan is paid off.
A REIT must distribute what percent of its taxable income to
stockholders every year? - correct answer - 90%
True or False: a REIT is subject to corporate-level tax on the
taxable income it distributes to stockholders. - correct answer -
False. A REIT must pay out at least 90% of its taxable income
as dividends. Since those dividends are actually the taxable
portion of the income generated by the REIT-owned properties,
the company is able to pass its tax burden to shareholders
rather than pay Federal taxes itself.
What is Section 1231 property? - correct answer - Section 1231
property is real or depreciable business property (such as a
commercial building) held for more than one year.
A section 1231 gain from the sale of a property is taxed at the
lower capital gains tax rate versus the rate for ordinary income.
If the sold property was held for less than one year, the 1231
gain does not apply.
The basis for a property that is purchased equals the
purchase price plus what? - correct answer - Plus any
capitalized acquisition costs (not financing costs.)
What are the four basic components of NOI? - correct
Questions And Correct Answers.
What's the biggest difference between cap rate and yield? - correct
answer
- Cap rate does not factor in eventual sale proceeds - yield
does. If there is a profit on the sale then yield will be higher than
cap rate.
Cap rate + growth = [XXXX]? - correct answer - Yield
True of false: Leasing commissions are included in Operating
Expense? - correct answer - False - they are included in
Cash Flow Before Taxes.
What is Net Present Value? - correct answer - NPV is the
difference between the present value of cash inflows and the
present value of cash outflows over time.
True of false: For commercial and investment properties, loan
costs paid at time period zero are deducted in full in the year
they are paid. - correct answer - False - they are amortized
over the full term of the loan. Any unamortized costs are
, expenses in the year the loan is paid off.
A REIT must distribute what percent of its taxable income to
stockholders every year? - correct answer - 90%
True or False: a REIT is subject to corporate-level tax on the
taxable income it distributes to stockholders. - correct answer -
False. A REIT must pay out at least 90% of its taxable income
as dividends. Since those dividends are actually the taxable
portion of the income generated by the REIT-owned properties,
the company is able to pass its tax burden to shareholders
rather than pay Federal taxes itself.
What is Section 1231 property? - correct answer - Section 1231
property is real or depreciable business property (such as a
commercial building) held for more than one year.
A section 1231 gain from the sale of a property is taxed at the
lower capital gains tax rate versus the rate for ordinary income.
If the sold property was held for less than one year, the 1231
gain does not apply.
The basis for a property that is purchased equals the
purchase price plus what? - correct answer - Plus any
capitalized acquisition costs (not financing costs.)
What are the four basic components of NOI? - correct
