Real Estate Finance Essay

796 words - 4 pages

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  | 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 |

  | 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% |
| ...view middle of the document...

| 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 |

  | 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 |

  | 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 |

  | 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. |

  | 11. | Which of the following would NOT be considered an advantage that an investor might consider under a sale-leaseback of land? ...

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