CCIM 101 – Financial Analysis Practice Exam
Questions And Correct Answers (Verified Answers)
Plus Rationales 2026 Q&A | Instant Download Pdf
1. What are the four basic components of NOI?
1 - Potential rental income (PRI), 2 - Vacancy and credit losses, 3 - Other income, 4 -
Operating expenses
These components determine the Net Operating Income by accounting for all potential
income and operational costs.
2. [XXXX] is used to determine a property's PRI (Potential Rental Income).
Lease analysis
Lease analysis provides the basis for calculating the full potential income before
deductions.
3. PRI equals NOI in what property/tenant scenario?
If the property has one tenant who pays all expenses
In a triple-net lease situation, the landlord’s NOI equals PRI since the tenant covers all
expenses.
4. What is the formula for Net Operating Income (NOI)?
NOI = Potential Rental Income – Vacancy & Credit Losses + Other Income – Operating
Expenses
This formula provides the property's income before financing and taxes.
5. What does the term “Cap Rate” stand for?
Capitalization Rate
Cap Rate expresses the relationship between a property’s NOI and its value.
6. How is Cap Rate calculated?
Cap Rate = NOI ÷ Property Value
It measures the return on investment for income-producing properties.
, 7. If a property’s NOI is $120,000 and its value is $1,500,000, what is the Cap Rate?
8%
120,000 ÷ 1,500,000 = 0.08, or 8%.
8. What does a higher Cap Rate generally indicate?
Higher risk and potentially higher return
Investors demand higher returns for riskier properties.
9. What does a lower Cap Rate suggest?
Lower risk and potentially lower return
Prime properties or those in stable markets often have lower Cap Rates.
10. What is the Gross Rent Multiplier (GRM) formula?
GRM = Sale Price ÷ Gross Rental Income
It estimates value based on gross rental income without factoring in expenses.
11. A property sells for $500,000 with gross annual rent of $50,000. What is the GRM?
10
500,000 ÷ 50,000 = 10.
12. What is the Equity Dividend Rate (EDR)?
Before-tax cash flow ÷ Initial equity investment
EDR measures the return on the investor’s equity contribution.
13. Which financial statement shows income and expenses for a property?
Operating statement
It summarizes financial performance over a period of time.
14. What is Effective Gross Income (EGI)?
EGI = Potential Rental Income – Vacancy & Credit Losses + Other Income
EGI shows total income available after adjusting for vacancies.
15. What is the Debt Service Coverage Ratio (DSCR) formula?
DSCR = NOI ÷ Annual Debt Service
It measures a property’s ability to pay debt obligations.
16. A property has NOI of $100,000 and annual debt service of $80,000. What is DSCR?
1.25
100,000 ÷ 80,000 = 1.25, meaning NOI covers debt service 1.25 times.
17. What DSCR value is typically acceptable to lenders?
1.20 or higher
This provides a cushion for loan repayment.
Questions And Correct Answers (Verified Answers)
Plus Rationales 2026 Q&A | Instant Download Pdf
1. What are the four basic components of NOI?
1 - Potential rental income (PRI), 2 - Vacancy and credit losses, 3 - Other income, 4 -
Operating expenses
These components determine the Net Operating Income by accounting for all potential
income and operational costs.
2. [XXXX] is used to determine a property's PRI (Potential Rental Income).
Lease analysis
Lease analysis provides the basis for calculating the full potential income before
deductions.
3. PRI equals NOI in what property/tenant scenario?
If the property has one tenant who pays all expenses
In a triple-net lease situation, the landlord’s NOI equals PRI since the tenant covers all
expenses.
4. What is the formula for Net Operating Income (NOI)?
NOI = Potential Rental Income – Vacancy & Credit Losses + Other Income – Operating
Expenses
This formula provides the property's income before financing and taxes.
5. What does the term “Cap Rate” stand for?
Capitalization Rate
Cap Rate expresses the relationship between a property’s NOI and its value.
6. How is Cap Rate calculated?
Cap Rate = NOI ÷ Property Value
It measures the return on investment for income-producing properties.
, 7. If a property’s NOI is $120,000 and its value is $1,500,000, what is the Cap Rate?
8%
120,000 ÷ 1,500,000 = 0.08, or 8%.
8. What does a higher Cap Rate generally indicate?
Higher risk and potentially higher return
Investors demand higher returns for riskier properties.
9. What does a lower Cap Rate suggest?
Lower risk and potentially lower return
Prime properties or those in stable markets often have lower Cap Rates.
10. What is the Gross Rent Multiplier (GRM) formula?
GRM = Sale Price ÷ Gross Rental Income
It estimates value based on gross rental income without factoring in expenses.
11. A property sells for $500,000 with gross annual rent of $50,000. What is the GRM?
10
500,000 ÷ 50,000 = 10.
12. What is the Equity Dividend Rate (EDR)?
Before-tax cash flow ÷ Initial equity investment
EDR measures the return on the investor’s equity contribution.
13. Which financial statement shows income and expenses for a property?
Operating statement
It summarizes financial performance over a period of time.
14. What is Effective Gross Income (EGI)?
EGI = Potential Rental Income – Vacancy & Credit Losses + Other Income
EGI shows total income available after adjusting for vacancies.
15. What is the Debt Service Coverage Ratio (DSCR) formula?
DSCR = NOI ÷ Annual Debt Service
It measures a property’s ability to pay debt obligations.
16. A property has NOI of $100,000 and annual debt service of $80,000. What is DSCR?
1.25
100,000 ÷ 80,000 = 1.25, meaning NOI covers debt service 1.25 times.
17. What DSCR value is typically acceptable to lenders?
1.20 or higher
This provides a cushion for loan repayment.
