HRTM 421 FINAL EXAM WITH ALL CORRECT & 100%
VERIFIED ANSWERS (UPDATED TO PASS)
principal Correct answer-amount of money borrowed
debt service Correct answer-the amount of the regular fixed payments to the bank in repayment of
the loan
interest rate Correct answer-the percentage of the loan balance the lender charges the borrower
for the use of money
amortization rate Correct answer-the number of years the debt service payment is based on
loan-to-value ratio Correct answer-the percentage of a venture's estimated value for which a
lender will approve a loan
loan-to-cost ratio Correct answer-same as the loan-to-value ratio with the cost of the project
substituted for value in the calculation
debt service coverage rate Correct answer-cash flow divided by debt service
carried interest Correct answer-ownership percentage the sponsor or promoter of a deal receives
with no equity investment on his part
promoted interest Correct answer-ownership awarded to the sponsor or promoter after the
business venture achieves the equity investors hurdle rate (ROI)
equity kicker Correct answer-percentage of profit on sale awarded the sponsor or promoter of the
deal after the equity investors receive the return on their initial investment
sensitivity analysis Correct answer-method of analyzing investment opportunities by conservatively
altering the assumptions on which the projections are based
MAI Correct answer-member of the appraisal institute
cost replacement approach Correct answer-a way to estimate the value of a hotel property based
on the cost to replace the property in its current state
comparable sales approach Correct answer-a way to estimate the value of a hotel based on recent
sale prices of comparable properties
income approach Correct answer-a way to estimate the current market value of a property by
discounting projected future cash flows including the estimated sale price of the property at the end
of the analysis period
IRR approach Correct answer-a way to estimate the current market value of a property by
calculating the percentage yield of the projected future cash flows, given the investment cost
fact sheet Correct answer-a one-page description of the key components of the project or venture
VERIFIED ANSWERS (UPDATED TO PASS)
principal Correct answer-amount of money borrowed
debt service Correct answer-the amount of the regular fixed payments to the bank in repayment of
the loan
interest rate Correct answer-the percentage of the loan balance the lender charges the borrower
for the use of money
amortization rate Correct answer-the number of years the debt service payment is based on
loan-to-value ratio Correct answer-the percentage of a venture's estimated value for which a
lender will approve a loan
loan-to-cost ratio Correct answer-same as the loan-to-value ratio with the cost of the project
substituted for value in the calculation
debt service coverage rate Correct answer-cash flow divided by debt service
carried interest Correct answer-ownership percentage the sponsor or promoter of a deal receives
with no equity investment on his part
promoted interest Correct answer-ownership awarded to the sponsor or promoter after the
business venture achieves the equity investors hurdle rate (ROI)
equity kicker Correct answer-percentage of profit on sale awarded the sponsor or promoter of the
deal after the equity investors receive the return on their initial investment
sensitivity analysis Correct answer-method of analyzing investment opportunities by conservatively
altering the assumptions on which the projections are based
MAI Correct answer-member of the appraisal institute
cost replacement approach Correct answer-a way to estimate the value of a hotel property based
on the cost to replace the property in its current state
comparable sales approach Correct answer-a way to estimate the value of a hotel based on recent
sale prices of comparable properties
income approach Correct answer-a way to estimate the current market value of a property by
discounting projected future cash flows including the estimated sale price of the property at the end
of the analysis period
IRR approach Correct answer-a way to estimate the current market value of a property by
calculating the percentage yield of the projected future cash flows, given the investment cost
fact sheet Correct answer-a one-page description of the key components of the project or venture
