IAAO 102 ANSWERS AND QUESTIONS SET A+
✔✔Effective Gross Income (EGI) - ✔✔obtained after determining the potential income
for the property
✔✔What kind of expenses are capital improvements? - ✔✔Improper Expenses.
✔✔Percentage Lease - ✔✔a contract that requires a fixed minimum base event based
on volume of business, sales, productivity, or use of the property by the tenant is called
___________
✔✔Five Methods of Developing an overall capitalization rate - - ✔✔1. Derivation from
comparable **** This is the one on the test
2. Band of Investment Technique (Mortgage & Equity Components)
3. Net Income Ratio
4. Debt coverage ratio
5. Band of Investment Technique (LAND AND IMPROVEMENT COMPONENTS)
✔✔Mortgage Capitalization Rate - ✔✔is the ratio of the annual principal and interest
payments to the amount borrowed.
✔✔Straight line Capitalization Assumption - ✔✔1. Assume a declining income stream
during the remaining economic life of improvements
2. Recapture received in equal amount during the remaining economic life of the
improvements
3. The property's overall yield (discounts) is receive don't eh balance of the investment,
after a periodic recapture of portion oft h improvement value
✔✔ Anticipation - ✔✔Value is created by the expectation of benefits to be derived in the
future
✔✔Substitution - ✔✔the prices, rents, and rates of return of property tend to be set by
the current prices, rents and rates of return for equally desire able substitute properties.
✔✔Effective Gross Income (EGI) - ✔✔obtained after determining the potential income
for the property
✔✔What kind of expenses are capital improvements? - ✔✔Improper Expenses.
✔✔Percentage Lease - ✔✔a contract that requires a fixed minimum base event based
on volume of business, sales, productivity, or use of the property by the tenant is called
___________
✔✔Five Methods of Developing an overall capitalization rate - - ✔✔1. Derivation from
comparable **** This is the one on the test
2. Band of Investment Technique (Mortgage & Equity Components)
3. Net Income Ratio
4. Debt coverage ratio
5. Band of Investment Technique (LAND AND IMPROVEMENT COMPONENTS)
✔✔Mortgage Capitalization Rate - ✔✔is the ratio of the annual principal and interest
payments to the amount borrowed.
✔✔Straight line Capitalization Assumption - ✔✔1. Assume a declining income stream
during the remaining economic life of improvements
2. Recapture received in equal amount during the remaining economic life of the
improvements
3. The property's overall yield (discounts) is receive don't eh balance of the investment,
after a periodic recapture of portion oft h improvement value
✔✔ Anticipation - ✔✔Value is created by the expectation of benefits to be derived in the
future
✔✔Substitution - ✔✔the prices, rents, and rates of return of property tend to be set by
the current prices, rents and rates of return for equally desire able substitute properties.
