MGMT 170 - Real Estate Finance and Investments Professor Mark S. Karlan FINAL EXAM
PRACTICE QUESTIONS Spring 2026 AND UCLA Real Estate Finance & Investments - Spring
2026 Final Exam Practice Questions - Answer Key
MGMT 170 - Real Estate Finance and Investments
Professor Mark S. Karlan
FINAL EXAM PRACTICE QUESTIONS
Spring 2026
1) A 200,000 square foot Best Buy anchored shopping center in suburban Chicago, Illinois
that was purchased in January 2020 for $50 million was producing an annual NOI of
$3,000,000 at the time of acquisition. Purchase money financing was obtained from
CIBC Bank at a 60% LTV ratio and a 5.75% annual interest rate payable monthly and
fully amortized over 30 years. What was the acquisition cap rate?
(A) 15.0%
(B) 10.0%
(C) 6.0%
(D) 4.0%
2) A property investor wanted to acquire a 100,000 square foot industrial building in
Portland, Oregon for $60 per square foot. JP Morgan Chase committed to fund a 30-
year fixed rate purchase money mortgage at an annual interest rate of 5.25% with a
maximum LTV of 70%. What is the minimum amount of equity needed to close the
acquisition?
(A) $6,000,000
(B) $4,200,000
(C) $3,000,000
(D) $1,800,000
3) A 36-unit apartment building in McLean, Virginia is expected to appreciate in value at a
rate of 10% per year. If the owner borrows at an LTV of 80% interest-only and the
property’s NOI exactly covers the monthly mortgage payments, what would be the
expected appreciation rate on the invested equity for the first year?
(A) 10%
(B) 20%
(C) 50%
(D) 75%
4) A 26-unit apartment building in North Hollywood was purchased for $10,000,000 at a
cap rate of 3.75% with a 75% LTV interest-only 7-year mortgage loan at a 3.5% annual
interest rate. If the owner paid the monthly mortgage payments on time, and if after five
years the property appreciated by 40%, what would the amount of the owner’s equity in
the property be at that time?
(A) $2,500,000
(B) $4,000,000
(C) $6,500,000
(D) $10,000,000
5) A borrower who was in default on a mortgage loan entered into discussions with his
lender to negotiate a workout of the loan agreement. Which one of the following
concessions would likely be most acceptable to the lender?
(A) Permanently reducing the interest rate on the loan
(B) Reducing the outstanding principal balance of the loan
(C) Allowing the borrower to not make any monthly payments for a year
,MGMT 170 - Real Estate Finance and Investments Professor Mark S. Karlan FINAL EXAM
PRACTICE QUESTIONS Spring 2026 AND UCLA Real Estate Finance & Investments - Spring
2026 Final Exam Practice Questions - Answer Key
(D) Temporarily reducing the interest rate while adding the reduction to the loan balance
, MGMT 170 - Real Estate Finance and Investments Professor Mark S. Karlan FINAL EXAM
PRACTICE QUESTIONS Spring 2026 AND UCLA Real Estate Finance & Investments - Spring
2026 Final Exam Practice Questions - Answer Key
6) An apartment investor from Southern California decided to buy a 72-unit apartment
building in Columbus, Ohio for $9.0 million and fund the acquisition with a $1.5 million
cash down payment and a $7.5 million 25-year fully amortizing fixed rate mortgage loan
from Bank of America at an annual interest rate of 4.75% payable monthly. What would
be the monthly payment of principal and interest?
(A) $29,687.50
(B) $39,123.55
(C) $42,758.80
(D) $51,310.56
7) An apartment investor from Southern California decided to buy a 72-unit apartment
building in Columbus, Ohio for $9.0 million and fund the acquisition with a $1.5 million
cash down payment and a $7.5 million 25-year fully amortizing fixed rate mortgage loan
from Bank of America at an annual interest rate of 4.75% payable monthly. What portion
of the first monthly payment would be principal?
(A) $9,436.05
(B) $13,071.30
(C) $15,685.56
(D) $29,687.50
8) A home buyer acquired a brand new 5,400 square foot 5-bedroom, 4-bathroom home in
Glendale, California for $4 million. To lock in the low current interest rates for as long as
possible, she financed the purchase with a 30-year fully amortizing fixed rate mortgage
loan for $3.6 million with an annual interest rate of 4.25% payable monthly and no
prepayment penalty. If she wants to pay off the loan after 8 years, what would be the
payoff amount?
(A) $0
(B) $1,439,132
(C) $3,034,083
(D) $3,600,000
9) A shopping center investor is in escrow to purchase a large retail property in Dayton,
Ohio for $36,000,000 and is offered two loan alternatives by his preferred lender. The
first is a 70% LTV fully amortizing mortgage loan for 25 years at a 6% annual interest
rate payable monthly and the second is a 75% LTV fully amortizing mortgage loan for 25
years at a 6.6% annual interest rate payable monthly. If the loan will be held to maturity,
what is the incremental borrowing cost on the extra 5% borrowed for the 75% LTV loan?
(A) 6.0%
(B) 6.6%
(C) 14.0%
(D) 15.0%
10) An LLC differs from a limited partnership primarily because:
(A) In an LLC, all members will have limited liability whereas in a limited partnership at
least one of the partners will have unlimited liability
(B) In an LLC, at least one of the members will have unlimited liability whereas in a
limited partnership all of the partners will have limited liability
(C) In an LLC, all members will have limited liability whereas in a limited partnership all
of the partners will have unlimited liability
(D) In an LLC, all members will have unlimited liability whereas in a limited partnership
all of the partners will have limited liability
PRACTICE QUESTIONS Spring 2026 AND UCLA Real Estate Finance & Investments - Spring
2026 Final Exam Practice Questions - Answer Key
MGMT 170 - Real Estate Finance and Investments
Professor Mark S. Karlan
FINAL EXAM PRACTICE QUESTIONS
Spring 2026
1) A 200,000 square foot Best Buy anchored shopping center in suburban Chicago, Illinois
that was purchased in January 2020 for $50 million was producing an annual NOI of
$3,000,000 at the time of acquisition. Purchase money financing was obtained from
CIBC Bank at a 60% LTV ratio and a 5.75% annual interest rate payable monthly and
fully amortized over 30 years. What was the acquisition cap rate?
(A) 15.0%
(B) 10.0%
(C) 6.0%
(D) 4.0%
2) A property investor wanted to acquire a 100,000 square foot industrial building in
Portland, Oregon for $60 per square foot. JP Morgan Chase committed to fund a 30-
year fixed rate purchase money mortgage at an annual interest rate of 5.25% with a
maximum LTV of 70%. What is the minimum amount of equity needed to close the
acquisition?
(A) $6,000,000
(B) $4,200,000
(C) $3,000,000
(D) $1,800,000
3) A 36-unit apartment building in McLean, Virginia is expected to appreciate in value at a
rate of 10% per year. If the owner borrows at an LTV of 80% interest-only and the
property’s NOI exactly covers the monthly mortgage payments, what would be the
expected appreciation rate on the invested equity for the first year?
(A) 10%
(B) 20%
(C) 50%
(D) 75%
4) A 26-unit apartment building in North Hollywood was purchased for $10,000,000 at a
cap rate of 3.75% with a 75% LTV interest-only 7-year mortgage loan at a 3.5% annual
interest rate. If the owner paid the monthly mortgage payments on time, and if after five
years the property appreciated by 40%, what would the amount of the owner’s equity in
the property be at that time?
(A) $2,500,000
(B) $4,000,000
(C) $6,500,000
(D) $10,000,000
5) A borrower who was in default on a mortgage loan entered into discussions with his
lender to negotiate a workout of the loan agreement. Which one of the following
concessions would likely be most acceptable to the lender?
(A) Permanently reducing the interest rate on the loan
(B) Reducing the outstanding principal balance of the loan
(C) Allowing the borrower to not make any monthly payments for a year
,MGMT 170 - Real Estate Finance and Investments Professor Mark S. Karlan FINAL EXAM
PRACTICE QUESTIONS Spring 2026 AND UCLA Real Estate Finance & Investments - Spring
2026 Final Exam Practice Questions - Answer Key
(D) Temporarily reducing the interest rate while adding the reduction to the loan balance
, MGMT 170 - Real Estate Finance and Investments Professor Mark S. Karlan FINAL EXAM
PRACTICE QUESTIONS Spring 2026 AND UCLA Real Estate Finance & Investments - Spring
2026 Final Exam Practice Questions - Answer Key
6) An apartment investor from Southern California decided to buy a 72-unit apartment
building in Columbus, Ohio for $9.0 million and fund the acquisition with a $1.5 million
cash down payment and a $7.5 million 25-year fully amortizing fixed rate mortgage loan
from Bank of America at an annual interest rate of 4.75% payable monthly. What would
be the monthly payment of principal and interest?
(A) $29,687.50
(B) $39,123.55
(C) $42,758.80
(D) $51,310.56
7) An apartment investor from Southern California decided to buy a 72-unit apartment
building in Columbus, Ohio for $9.0 million and fund the acquisition with a $1.5 million
cash down payment and a $7.5 million 25-year fully amortizing fixed rate mortgage loan
from Bank of America at an annual interest rate of 4.75% payable monthly. What portion
of the first monthly payment would be principal?
(A) $9,436.05
(B) $13,071.30
(C) $15,685.56
(D) $29,687.50
8) A home buyer acquired a brand new 5,400 square foot 5-bedroom, 4-bathroom home in
Glendale, California for $4 million. To lock in the low current interest rates for as long as
possible, she financed the purchase with a 30-year fully amortizing fixed rate mortgage
loan for $3.6 million with an annual interest rate of 4.25% payable monthly and no
prepayment penalty. If she wants to pay off the loan after 8 years, what would be the
payoff amount?
(A) $0
(B) $1,439,132
(C) $3,034,083
(D) $3,600,000
9) A shopping center investor is in escrow to purchase a large retail property in Dayton,
Ohio for $36,000,000 and is offered two loan alternatives by his preferred lender. The
first is a 70% LTV fully amortizing mortgage loan for 25 years at a 6% annual interest
rate payable monthly and the second is a 75% LTV fully amortizing mortgage loan for 25
years at a 6.6% annual interest rate payable monthly. If the loan will be held to maturity,
what is the incremental borrowing cost on the extra 5% borrowed for the 75% LTV loan?
(A) 6.0%
(B) 6.6%
(C) 14.0%
(D) 15.0%
10) An LLC differs from a limited partnership primarily because:
(A) In an LLC, all members will have limited liability whereas in a limited partnership at
least one of the partners will have unlimited liability
(B) In an LLC, at least one of the members will have unlimited liability whereas in a
limited partnership all of the partners will have limited liability
(C) In an LLC, all members will have limited liability whereas in a limited partnership all
of the partners will have unlimited liability
(D) In an LLC, all members will have unlimited liability whereas in a limited partnership
all of the partners will have limited liability
