Question 1

The real appreciation return was:

Accepted Answer

A)  0% 
B)  5% 
C)  10% 
D)  115%

Question 2

What is the Present Value of property with has a current year NOI of $100,000, which will grow at 3% per year, and can be discounted at a rate of r=8%?

Accepted Answer

A)  $2,000,000 
B)  $909,091 
C)  $1,250,000 
D)  Cannot be determined from given information

Question 3

All of the following are examples of the "savings objective" of investment except:

Accepted Answer

A)  A 25-year-old planning to be able to buy a house in 5 years. 
B)  A 30-year-old planning to be able to pay for her children's college in 15 years. 
C)  A 40-year-old planning for retirement in 25 years. 
D)  A 65-year-old planning how to use his wealth to support himself now that he is retired.

Question 4

If a property will produce net cash flow that grows at a rate of 1.5% per year in perpetuity, and the opportunity cost of capital is 12%, then what is the "cap rate" net cash flow / property value) for the property?

Accepted Answer

A)  8%. 
B)  10%. 
C)  10.5%. 
D)  12%.

Question 5

For the two questions below, consider the following period-by-period total returns:
Year 1: 5.00%
Year 2: 15.00%
Year 3: 25.00%
-What is the arithmetic average total return per year for the Years 1-3 period?

Accepted Answer

A)  5.00% 
B)  14.71% 
C)  15.00% 
D)  15.23% 
E)  45.00%

Question 6

Suppose you pay $100,000 for a property today. The property appreciates 8% in the first year, and 12% in the second year. The third year yield was 7%. What was the income generated by the property in year 3?

Accepted Answer

A)  $7,000 
B)  $8,000 
C)  $8,467 
D)  $29,427 
E)  Cannot be computed from the information given.

Question 7

Suppose an asset is worth $100,000 now and in one year it will either be worth $115,000 or $95,000 with equal chance). The expected return and risk as defined in Chapter 9) are:

Accepted Answer

A)  15% return, 20% risk 
B)  15% return, 17.4% risk 
C)  0% return, 5% risk 
D)  0% return, 10% risk 
E)  5% return, 10% risk

Question 8

You expect to have to make a capital improvement expenditure of $50,000 in a property in 5 years. If you can only set aside at most $800 at the end of each month in a sinking fund, and the annual interest in the sinking fund is 6%, then how many months in advance of the 5-year horizon must you begin saving the money?

Accepted Answer

A)  35 months. 
B)  45 months. 
C)  55 months. 
D)  Starting now 60 months in advance) is already too late.

Question 9

You need to borrow $100,000 for a down-payment on a house, and $900.00 per month is the most you can afford. How long a loan term must you get in your mortgage, if the interest rate is 9%?

Accepted Answer

A)  15 years 180 months). 
B)  20 years 240 months). 
C)  30 years 360 months). 
D)  No solution.

Question 10

For the two questions below, consider the following period-by-period total returns:
Year 1: 5.00%
Year 2: 15.00%
Year 3: 25.00%
-What is the geometric average total return per year for the Years 1-3 period?

Accepted Answer

A)  5.00% 
B)  14.71% 
C)  15.00% 
D)  15.23% 
E)  45.00%

Exam 3: Central Place Theory and the System of Cities

The real appreciation return was:

What is the Present Value of property with has a current year NOI of $100,000, which will grow at 3% per year, and can be discounted at a rate of r=8%?

All of the following are examples of the "savings objective" of investment except:

If a property will produce net cash flow that grows at a rate of 1.5% per year in perpetuity, and the opportunity cost of capital is 12%, then what is the "cap rate" net cash flow / property value) for the property?

For the two questions below, consider the following period-by-period total returns: Year 1: 5.00% Year 2: 15.00% Year 3: 25.00% -What is the arithmetic average total return per year for the Years 1-3 period?

Suppose you pay $100,000 for a property today. The property appreciates 8% in the first year, and 12% in the second year. The third year yield was 7%. What was the income generated by the property in year 3?

Suppose an asset is worth $100,000 now and in one year it will either be worth $115,000 or $95,000 with equal chance) . The expected return and risk as defined in Chapter 9) are:

You need to borrow $100,000 for a down-payment on a house, and $900.00 per month is the most you can afford. How long a loan term must you get in your mortgage, if the interest rate is 9%?

For the two questions below, consider the following period-by-period total returns: Year 1: 5.00% Year 2: 15.00% Year 3: 25.00% -What is the geometric average total return per year for the Years 1-3 period?