1
IAAO 102 EXAM 2026-27 WITH QUESTIONS
AND COMPLETE SOLUTIONS
If the Assessment Level is 30% of appraised value and the current tax
rate is $8.50 per hundred. What is the Effective Tax Rate (ETR)?
(EAT) - CORRECT ANSWER ✔️ 0.0255 or 2.55% (rounded)
The process used to convert income into an estimate of value. -
CORRECT ANSWER ✔️ Capitalization
What are the four major categories required when selecting
comparable improved properties for the development of an Overall
Capitalization Rate (Ro)? - CORRECT ANSWER ✔️ * Amenities
* Land-to-Improvement Ratio
* Expense Ratios
* Remaining Economic Life (REL)
Direct Capitalization is different from , in that it does not
directly consider the individual cash flows beyond the first year. -
CORRECT ANSWER ✔️ Yield Capitalization
is different from Yield Capitalization, in that it does not
directly consider the individual cash flows beyond the first year. -
CORRECT ANSWER ✔️ Direct Capitalization
The formula Value equals is one of the generic formulas
used in Direct Capitalization. - CORRECT ANSWER ✔️ Value = Income /
Rate (IRV)
In Straight-Line Capitalization, is received in equal
,2
amounts during the Remaining Economic Life (REL) of the
improvement. - CORRECT ANSWER ✔️ Recapture
Straight-Line Capitalization assumes a income stream
during the Remaining Economic Life (REL) of the improvements. -
CORRECT ANSWER ✔️ Declining
If the property has the following, what should you use?
* Income is expected to decline over the remaining economic life
* Discount (or Overall Yield) is earned on nondepreciated balance of
investment
* Recapture is received in equal amounts during Remaining Economic
Life (REL) of improvements - CORRECT ANSWER ✔️ Straight-Line
Capitalization
What should be used when:
* Land value supported by market data is known
* Improvement is not new
* Improvement is not adequate for site
* Vacant land sales are available - CORRECT ANSWER ✔️
Building Residual Technique
What should be used when:
* Improvements are adequate in condition and suitability to the site
* Land consists of a large parcel with no comparable property
available
* Land sales are not available
* Building is new, and the proper use and cost are known -
CORRECT ANSWER ✔️ Land Residual Technique
, 3
A loan secured by real property featuring an interest rate that is
constant for the term of the loan. - CORRECT ANSWER ✔️ Fixed-Rate
Mortgage
The basic equation used in the income approach to value. -
CORRECT ANSWER ✔️ Income / Rate = Value (IRV)
The rental income that a property would most probably command in
the open market. - CORRECT ANSWER ✔️ Market Rent
A property has a Net Operating Income (NOI) of $10,000 , interest
payments of $8,000 and principle payments of $1,000. What is the Debt
Coverage Ratio (DCR)? - CORRECT ANSWER ✔️ 1.11
What is the formula to find the Debt Coverage Ratio (DCR)? -
CORRECT ANSWER ✔️ NOI / Im
The ratio between the payments of principle and interest on a
mortgage to the original amount borrowed. - CORRECT ANSWER
✔️ Mortgage Capitalization Rate (Rm)
Mortgage Capitalization Rate (Rm) is expressed how? -
CORRECT ANSWER ✔️ Annually
A method of converting an estimate of a single year's income into value
in one direct step. - CORRECT ANSWER ✔️ Direct Capitalization
Two generic formulas used in Direct Capitalization are ??? -
CORRECT ANSWER ✔️ * IRV
* VIF
IAAO 102 EXAM 2026-27 WITH QUESTIONS
AND COMPLETE SOLUTIONS
If the Assessment Level is 30% of appraised value and the current tax
rate is $8.50 per hundred. What is the Effective Tax Rate (ETR)?
(EAT) - CORRECT ANSWER ✔️ 0.0255 or 2.55% (rounded)
The process used to convert income into an estimate of value. -
CORRECT ANSWER ✔️ Capitalization
What are the four major categories required when selecting
comparable improved properties for the development of an Overall
Capitalization Rate (Ro)? - CORRECT ANSWER ✔️ * Amenities
* Land-to-Improvement Ratio
* Expense Ratios
* Remaining Economic Life (REL)
Direct Capitalization is different from , in that it does not
directly consider the individual cash flows beyond the first year. -
CORRECT ANSWER ✔️ Yield Capitalization
is different from Yield Capitalization, in that it does not
directly consider the individual cash flows beyond the first year. -
CORRECT ANSWER ✔️ Direct Capitalization
The formula Value equals is one of the generic formulas
used in Direct Capitalization. - CORRECT ANSWER ✔️ Value = Income /
Rate (IRV)
In Straight-Line Capitalization, is received in equal
,2
amounts during the Remaining Economic Life (REL) of the
improvement. - CORRECT ANSWER ✔️ Recapture
Straight-Line Capitalization assumes a income stream
during the Remaining Economic Life (REL) of the improvements. -
CORRECT ANSWER ✔️ Declining
If the property has the following, what should you use?
* Income is expected to decline over the remaining economic life
* Discount (or Overall Yield) is earned on nondepreciated balance of
investment
* Recapture is received in equal amounts during Remaining Economic
Life (REL) of improvements - CORRECT ANSWER ✔️ Straight-Line
Capitalization
What should be used when:
* Land value supported by market data is known
* Improvement is not new
* Improvement is not adequate for site
* Vacant land sales are available - CORRECT ANSWER ✔️
Building Residual Technique
What should be used when:
* Improvements are adequate in condition and suitability to the site
* Land consists of a large parcel with no comparable property
available
* Land sales are not available
* Building is new, and the proper use and cost are known -
CORRECT ANSWER ✔️ Land Residual Technique
, 3
A loan secured by real property featuring an interest rate that is
constant for the term of the loan. - CORRECT ANSWER ✔️ Fixed-Rate
Mortgage
The basic equation used in the income approach to value. -
CORRECT ANSWER ✔️ Income / Rate = Value (IRV)
The rental income that a property would most probably command in
the open market. - CORRECT ANSWER ✔️ Market Rent
A property has a Net Operating Income (NOI) of $10,000 , interest
payments of $8,000 and principle payments of $1,000. What is the Debt
Coverage Ratio (DCR)? - CORRECT ANSWER ✔️ 1.11
What is the formula to find the Debt Coverage Ratio (DCR)? -
CORRECT ANSWER ✔️ NOI / Im
The ratio between the payments of principle and interest on a
mortgage to the original amount borrowed. - CORRECT ANSWER
✔️ Mortgage Capitalization Rate (Rm)
Mortgage Capitalization Rate (Rm) is expressed how? -
CORRECT ANSWER ✔️ Annually
A method of converting an estimate of a single year's income into value
in one direct step. - CORRECT ANSWER ✔️ Direct Capitalization
Two generic formulas used in Direct Capitalization are ??? -
CORRECT ANSWER ✔️ * IRV
* VIF
