CCIM 101 PRACTICE EXAM QUESTIONS
AND ANSWERS 100% VERIFIED. JUST
RELEASED
1. A commercial property has a Potential Gross Income (PGI) of $500,000, a vacancy rate of
5%, and operating expenses of $180,000. What is the Net Operating Income (NOI)?
A. $320,000
B. $305,000
C. $475,000
D. $295,000
Answer: D
Conceptual Explanation: NOI = (PGI - Vacancy) - Operating Expenses. $500,000 * 0.95 =
$475,000 (EGI). $475,000 - $180,000 = $295,000.
2. Which of the following describes the relationship between the Cap Rate and property
value?
A. Directly proportional
B. Exponentially related
C. No mathematical relationship
D. Inversely proportional
,Answer: D
Conceptual Explanation: Value = NOI / Cap Rate. As the Cap Rate increases, the Value
decreases, assuming NOI remains constant, indicating an inverse relationship.
3. An investor buys a property for $2,000,000 with a $1,500,000 loan. The first-year NOI is
$160,000 and the annual debt service is $110,000. What is the Cash-on-Cash Return?
A. 8.0%
B. 7.3%
C. 10.6%
D. 10.0%
Answer: D
Conceptual Explanation: Cash-on-Cash Return = Before-Tax Cash Flow (BTCF) / Equity.
BTCF = $160,000 - $110,000 = $50,000. Equity = $2,000,000 - $1,500,000 = $500,000.
$50,000 / $500,000 = 10%.
4. If the Debt Coverage Ratio (DCR) is 1.0, what does this imply about the property’s financial
status?
A. The property is generating a large profit after debt.
B. The property is in default.
C. The property has no operating expenses.
D. The NOI is exactly equal to the debt service.
, Answer: D
Conceptual Explanation: DCR = NOI / Annual Debt Service. A DCR of 1.0 means the
income generated by the property covers the debt exactly, leaving no cash flow.
5. Calculate the Operating Expense Ratio (OER) if EGI is $200,000 and Operating Expenses are
$70,000.
A. 35%
B. 65%
C. 28%
D. 42%
Answer: A
Conceptual Explanation: OER = Operating Expenses / Effective Gross Income. $70,000 /
$200,000 = 0.35 or 35%.
6. A property is sold for $3,500,000. The transaction costs are 6%. What is the Net Sales Price?
A. $3,400,000
B. $3,300,000
C. $3,290,000
D. $3,200,000
Answer: C
AND ANSWERS 100% VERIFIED. JUST
RELEASED
1. A commercial property has a Potential Gross Income (PGI) of $500,000, a vacancy rate of
5%, and operating expenses of $180,000. What is the Net Operating Income (NOI)?
A. $320,000
B. $305,000
C. $475,000
D. $295,000
Answer: D
Conceptual Explanation: NOI = (PGI - Vacancy) - Operating Expenses. $500,000 * 0.95 =
$475,000 (EGI). $475,000 - $180,000 = $295,000.
2. Which of the following describes the relationship between the Cap Rate and property
value?
A. Directly proportional
B. Exponentially related
C. No mathematical relationship
D. Inversely proportional
,Answer: D
Conceptual Explanation: Value = NOI / Cap Rate. As the Cap Rate increases, the Value
decreases, assuming NOI remains constant, indicating an inverse relationship.
3. An investor buys a property for $2,000,000 with a $1,500,000 loan. The first-year NOI is
$160,000 and the annual debt service is $110,000. What is the Cash-on-Cash Return?
A. 8.0%
B. 7.3%
C. 10.6%
D. 10.0%
Answer: D
Conceptual Explanation: Cash-on-Cash Return = Before-Tax Cash Flow (BTCF) / Equity.
BTCF = $160,000 - $110,000 = $50,000. Equity = $2,000,000 - $1,500,000 = $500,000.
$50,000 / $500,000 = 10%.
4. If the Debt Coverage Ratio (DCR) is 1.0, what does this imply about the property’s financial
status?
A. The property is generating a large profit after debt.
B. The property is in default.
C. The property has no operating expenses.
D. The NOI is exactly equal to the debt service.
, Answer: D
Conceptual Explanation: DCR = NOI / Annual Debt Service. A DCR of 1.0 means the
income generated by the property covers the debt exactly, leaving no cash flow.
5. Calculate the Operating Expense Ratio (OER) if EGI is $200,000 and Operating Expenses are
$70,000.
A. 35%
B. 65%
C. 28%
D. 42%
Answer: A
Conceptual Explanation: OER = Operating Expenses / Effective Gross Income. $70,000 /
$200,000 = 0.35 or 35%.
6. A property is sold for $3,500,000. The transaction costs are 6%. What is the Net Sales Price?
A. $3,400,000
B. $3,300,000
C. $3,290,000
D. $3,200,000
Answer: C
