CG Problems by the Dozen

Certified General Questions by the Dozen (CG)

Dozen #1

1) What is the capitalization rate for a property that has an Effective Gross Income Multiplier (EGIM) of 8.0 and an operating expense ratio of 40%?! [9533]

A. 6.4%

B. 7.9%

C. 5%

* D. 7.5%

2) The building value is $100,000. Net operating income is $20,000. Return on equity is 10%. The building has a 25 year life.  What is the total property value using the land residual technique?! [9537]

A. $180,000

B. $100,000

C. $120,000

* D. $160,000

3) The mortgage constant is 0.098762 and the LTV ratio is 80%.  The overall capitalization rate is 12%.  What is the equity dividend rate?! [9539]

A. 18.2%

B. 16.8%

C. 14.2%

* D. 20.5%

4) What is the indicated capitalization rate if the annual debt service is $14,365, the LTV is 75%, the mortgage is $96,500, and the equity dividend rate is 18%.! [9540]

A. 14.62%

B. 14.69%

C. 19.25%

* D. 15.66%

5) The net income is $50,000 and the land value is $150,000.  What is the indicated total property value assuming a 12% return on investment and a 50 year economic life of the building?  Round to the nearest $100.! [9541]

A. $399,000

* B. $378,600

C. $346,200

D. $323,400

6) Equity in the property being appraised is $20,000, net operating income is $15,000 and the equity capitalization rate is 12%. If the annual loan constant is 0.124395, what is the value of the property?! [9543]

A. $99,620

B. $89,820

C. $101,290

* D. $121,290

7) Mortgage financing is available at an 80% loan-to-value ratio with a mortgage constant of 0.144451.  The portion of the loan paid over the projected 10 year holding period is .0961 and the property is expected to depreciate in value 5%.

The equity yield rate is 16% with a sinking fund factor for the projection period of 0.049252.  What is the indicated overall rate of capitalization?! [9545]

A. 13.68%

B. 13.43%

C. 14.18%

* D. 14.42%

8) The NOI is $50,000 annually.  The building capitalization rate is 12% and the land capitalization rate is 10%.  The value of the building is $300,000.  What is the value of the property using the land residual method of estimating value?! [9547]

* A. $440,000

B. $154,000

C. $140,000

D. $360,000

9) A property under appraisal has 80% of its value allocated to the building and 20% allocated to the land. If the building capitalization rate is 11.5 % and the land capitalization rate is 9.5%, what is the overall capitalization rate?! [9548]

A. 21%

B. 9.2%

C. 7.6%

* D. 11.1%

10) Net operating income of the subject property is $20,000.00. The appropriate discount factor is 10% and the economic life of the building is expected to be 25 years. If the site is projected to be worth $90,000.00 at the end of the building's economic life, what is the  Estimated total property value using the property residual technique?! [9549]

A. $160,000

B. $170,000

* C. $190,000

D. $180,000

11) Provided with the following information, what is the building capitalization rate for the subject property?! [9562]

Land value - $60,000

Net operating income - $25,000

Land capitalization rate - 8%

Overall capitalization rate - 9%

A. 10.9%

B. 8.3%

C. 8.4%

* D. 9.3%

12) A property generates net operating income of $50,000 and annual debt service is $43,264.  If the mortgage constant is 0.1565 and the loan to value ratio is 75%, what is the rate of capitalization?! [9565]

* A. 0.1356

B. 0.1298

C. 0.1116

D. 0.1327

Dozen #2

1) Given the following data, what is the operating expense ratio?! [9571]

Transaction price - $120,000

Potential gross income - $10,000

Operating expenses - $3,150

Debt service - $6,200

Effective gross income - $9,000

Net operating income - $5,850

A. 53.8%

B. 31.5%

* C. 35%

D. 83.5%

2) Given the following data, what is the net income ratio?! [9572]

Transaction price - $150,000

Potential gross income - 22,000

Operating expenses - 5,200

Effective gross income - 20,800

Debt service - 6,800

Net operating income - 15,600

A. 33%

B. 25%

C. 43%

* D. 75%

3) A 100 unit apartment complex generates the following data. How many units must be rented for the year for this complex to break even?! [9574]

Debt service - $190,000

Operating expenses - 115,000

Replacement reserves - 6,000

Gross income - 400,000

Net operating income - $280,000

A. 77 units

B. 82 units

C. 88 units

* D. 75 units

4) The subject property is financed with a $74,000 mortgage loan.  Annual debt service is $7,476.  If net operating income is $9,000 and the equity dividend rate is 12 percent, what is the value of the property?! [9583]

A. $78,000

B. $83,400

* C. $86,700

D. $79,200

5) The subject property is financed with a fully amortizing mortgage loan in the amount of $60,000 the annual loan constant is 0.105.  If net operating income is $7,000 and the equity dividend rate is 10%, what is the value of the equity?! [9585]

A. $7,800

* B. $7,000

C. $6,600

D. $8,200

6) Financing is acquired for $100,000 at a 12% cost.  A down payment in the amount of $100,000 is made.  A 10% return is earned on the $200,000 investment.  What is the indicated return on equity?! [9598]

A. 9%

* B. 8%

C. 10%

D. 7%

7) What is the indicated overall capitalization rate of a property having a $185,000 mortgage, NOI of $27,980, and debt service of $24,680 if the desired equity dividend rate is 15%?! [9603]

* A. 13.5%

B. 13.0%

C. 12.0%

D. 12.5%

8) Given the following information.  What is the overall capitalization rate using the band of investment technique?! [9606]

Building capitalization rate - 11%

Percent land capitalization rate - 9%

Land value - 35%

A. .097

* B. .103

C. .100

D. .110

9) What is the projected equity payback period for an investment with the following characteristics?! [9607]

Effective gross income  - $50,000

Operating expenses - $30,000

Annual debt service - $15,000

Equity - $60,000

Vacancy loss - $2,000

* A. 12 years

B. 4 years

C. 8 years

D. 6 years

10) What is the net operating income for a property with the following characteristics?! [9610]

Effective gross income - $72,000

Operating expense ratio - 40%

Debt service - $35,000

Depreciation - $8,000

A. $200

B. $72,000

* C. $43,200

D. $8,200

11) What is the pre-tax cash flow of the subject property based on the following income and expense data? [9611]

Operating expenses - $18,000

Mortgage interest - $6,300

Mortgage principal - $1,200

Net operating income - $8,200

Vacancy loss - $450

* A. $700

B. $2,350

C. $1,900

D. $9,350

12) If a discount rate of 10% is appropriate, which of the following alternatives represents the highest and best use?! [9613]

1.  An office will have NOI of $175,000, a cost of $375,000, and an economic life of 50 years.

2.  A strip shopping center will have NOI of $169,000, a cost of $200,000, and an economic life of 40 years.

3.  A liquor lounge will have NOI of $205,000, a cost of $400,000, and an economic life of 30 years.

4.  An garage will have NOI of $120,000, a cost of $100,000, and an economic life of 40 years.

A. Office

B. Garage

* C. Liquor lounge

D. Strip shopping center