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Top of Form | 1. | A property produces a first year NOI of $100,000 which is expected to grow by 2% per year. If the property is expected to be sold in year 10, what is the expected sale price based on a terminal capitalization rate of 9.5% applied to the eleventh year NOI? | $1,308,815 | | $1,283,152 | | $1,263,158 | | $1,257,992 | |

(1) | 2. | A property is purchase for $15 million. Financing is obtained at a 75% loan-to-value ration with total annual payments of $1,179,000. The property produces an NOI of $1,400,000. What is the equity dividend rate (ratio of first year cash flow to equity)? | 5.89% | | 9.33% | | 7.86% | | 8.64% | |

(1) | 3. | A property that produces an annual NOI of $100,000 was purchased for $1,200,000. Debt service for the year was $95,000 of which $93,400 was interest and the remainder was principal. Annual depreciation is $38,095. What is the taxable income? | $5,000 | | $6,600 | | -$31,495 | | -$33,095 | |

(1) | 4. | A small office building is purchased of $1,200,000 with a balloon mortgage that is due at the end of year 10. Payments are based on a 25 year amortization period. If one point was charged, what annual amount can be deducted for tax purposes? | $1,200 | | $480 | | $0 | | $800 | |

(1) | 5. | A property is sold for $5,100,000 with selling costs of 3% of the sales price. The mortgage balance at the time of sale is $3,600,000. The property was purchased 5 years ago for $4,820,000. Annual depreciation allowances of $153,016 have been taken. If the tax rate is 28%, what is the after-tax cash flow from sale of the property? | $1,184,062 | | $969,840 | | $1,347,000 | | $1,097,218 | |

(1) | 6. | Which of the following definitions of income includes income from real estate classified as a capital assets? | Passive income | | Active income | | Portfolio income | | Passive activity income | |

(1) | 7. | Which of the following is FALSE regarding expense stops? | Expense Stops protect owners against increases in expenses | | Expense stops are usually based on expenses during the first term of the lease | | Expense Stops can pass through expense savings to tenants | | Expense Stops provide some protection against inflation | |

(1) | 8. | Which of the following is FALSE, concerning DCR: | It indicates whether NOI is sufficient to cover mortgage payments | | It is not of concern to lenders when loan to value ratios are low | | It is an indication of risk for the lender | | It is derived from NOI / Mortgage Payment | |

(0) | 9. | A property is financed with a 75% loan at 11.5% over 25 years. The property produces an ATIRR on total investment of 7.34% based on a tax rate of 31%. What can be said about the leverage associated with the property? → | Negative leverage exists | | Positive leverage exits | | No leverage exists | | Can't tell without knowing the ATIRR on equity | |

(1) | 10. | A loan in which the lender receives a percentage of the net operating income from the property is known as a(n): | participation loan. | | accrual loan. | | convertible loan. | | percentage loan. | |

(1) | 11. | Which of the following would NOT be considered an advantage that an investor might consider under a sale-leaseback of land? | The sale-leaseback in effect provides 100% financing on the land | | Lease payment are tax deductible | | The sale-leaseback provides the same depreciation deductibility with a smaller equity investment | | The land may appreciate over the holding period | |

(0) | 12. | A lender requires a 1.20 debt coverage ratio as a minimum. If the net operating income of a property is $45,000, what annual amount of debt service would provide the required debt coverage ratio? | $37,500 or higher | → | $37,500 or lower | | $54,000 or higher | | $54,000 or lower | |

(0) | 13. | A property is financed with an 85% loan-to-value ratio at 10% interest over 25 years. Estimate the BTIRRE on equity given that the BTIRRP is 10.75%. | 10.1% | | 10.4% | → | 15.0% | | 13.2% | |

(1) | 14. | Which of the following is NOT a benefits of a Sale Leaseback of land for investors? | It is a way of effectively obtaining 100% financing | | The lease payments are tax deductable | | Land can not be depreciated for tax purposes | | The land value may increase over the holding period. | |

(1) | 15. | Which of the following gives the lender an option to purchase a full or partial interest in the property at the end of some specified period of time: | Convertible Loan | | Sale Lease Back | | Accrual Loan | | Interest-Only Loan | |
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