CCIM 101 COMPREHENSIVE FINAL
EXAM PREP QUESTIONS AND
ANSWERS 100% VERIFIED. JUST
RELEASED
1. When performing a discounted cash flow analysis, if the internal rate of return (IRR) is
exactly equal to the discount rate, what must be true about the Net Present Value (NPV)?
A. The NPV is positive.
B. The NPV is negative.
C. The NPV equals the initial investment amount.
D. The NPV is zero.
Answer: D
Conceptual Explanation: By definition, the IRR is the discount rate that makes the NPV of
all cash flows from a particular project equal to zero.
2. In a Triple Net (NNN) lease, which of the following expenses is the tenant typically NOT
responsible for?
A. Property taxes
B. Structural roof and wall repairs
C. Common area maintenance (CAM)
,D. Property insurance
Answer: B
Conceptual Explanation: While NNN leases pass through taxes, insurance, and CAM to the
tenant, the landlord usually remains responsible for capital expenses related to the
structure (roof and bearing walls).
3. A property is purchased for $2,000,000 with a $1,500,000 loan. The first-year Net Operating
Income (NOI) is $160,000. What is the overall capitalization rate (Cap Rate)?
A. 10.6%
B. 8.0%
C. 6.5%
D. 12.0%
Answer: B
Conceptual Explanation: Cap Rate = NOI / Purchase Price. $160,000 / $2,000,000 = 0.08
or 8%.
4. What does a Location Quotient (LQ) of 1.5 for a specific industry in a local economy
indicate?
A. The local industry is a non-basic sector.
B. The industry is underrepresented in the local economy.
C. The industry is an export (basic) industry for the local economy.
, D. The local area is losing jobs in this sector.
Answer: C
Conceptual Explanation: An LQ greater than 1.0 indicates that the local economy has a
higher concentration of employment in that sector than the national average, suggesting it
exports goods/services.
5. An investor is in the 35% tax bracket. If a property generates $50,000 in taxable income
and $15,000 in depreciation, what is the tax liability?
A. $5,250
B. $12,250
C. $22,750
D. $17,500
Answer: D
Conceptual Explanation: Tax Liability = Taxable Income x Tax Rate. $50,000 x 0.35 =
$17,500. Depreciation is already subtracted to reach ‘taxable income’.
6. Which of the following describes the ‘Load Factor’ in a commercial office lease?
A. The percentage of tenants that renew their leases.
B. The maximum weight the floor can support.
C. The ratio of rentable square feet to usable square feet.
D. The ratio of operating expenses to gross income.
EXAM PREP QUESTIONS AND
ANSWERS 100% VERIFIED. JUST
RELEASED
1. When performing a discounted cash flow analysis, if the internal rate of return (IRR) is
exactly equal to the discount rate, what must be true about the Net Present Value (NPV)?
A. The NPV is positive.
B. The NPV is negative.
C. The NPV equals the initial investment amount.
D. The NPV is zero.
Answer: D
Conceptual Explanation: By definition, the IRR is the discount rate that makes the NPV of
all cash flows from a particular project equal to zero.
2. In a Triple Net (NNN) lease, which of the following expenses is the tenant typically NOT
responsible for?
A. Property taxes
B. Structural roof and wall repairs
C. Common area maintenance (CAM)
,D. Property insurance
Answer: B
Conceptual Explanation: While NNN leases pass through taxes, insurance, and CAM to the
tenant, the landlord usually remains responsible for capital expenses related to the
structure (roof and bearing walls).
3. A property is purchased for $2,000,000 with a $1,500,000 loan. The first-year Net Operating
Income (NOI) is $160,000. What is the overall capitalization rate (Cap Rate)?
A. 10.6%
B. 8.0%
C. 6.5%
D. 12.0%
Answer: B
Conceptual Explanation: Cap Rate = NOI / Purchase Price. $160,000 / $2,000,000 = 0.08
or 8%.
4. What does a Location Quotient (LQ) of 1.5 for a specific industry in a local economy
indicate?
A. The local industry is a non-basic sector.
B. The industry is underrepresented in the local economy.
C. The industry is an export (basic) industry for the local economy.
, D. The local area is losing jobs in this sector.
Answer: C
Conceptual Explanation: An LQ greater than 1.0 indicates that the local economy has a
higher concentration of employment in that sector than the national average, suggesting it
exports goods/services.
5. An investor is in the 35% tax bracket. If a property generates $50,000 in taxable income
and $15,000 in depreciation, what is the tax liability?
A. $5,250
B. $12,250
C. $22,750
D. $17,500
Answer: D
Conceptual Explanation: Tax Liability = Taxable Income x Tax Rate. $50,000 x 0.35 =
$17,500. Depreciation is already subtracted to reach ‘taxable income’.
6. Which of the following describes the ‘Load Factor’ in a commercial office lease?
A. The percentage of tenants that renew their leases.
B. The maximum weight the floor can support.
C. The ratio of rentable square feet to usable square feet.
D. The ratio of operating expenses to gross income.
