NCPQ EXAMS QUESTIONS AND ANSWERS
Value of a property depends on all but which of the following? - CORRECT ANSWER✅✅✅Calendar
dates of expected cash flows
The bank lends a person $100,000 through a 15-year fixed rate mortgage with an interest rate of 6%. If
the mortgage was to be paid (and was compounded) monthly, the calculator entry for "N" would be -
CORRECT ANSWER✅✅✅180
If you were offered an investment that paid out exactly $4,000 each year for 10 years, and at the end of
the 10th year paid an extra lump sum amount of $24,000, which of the following calculations would
suffice to find present value (PV) - CORRECT ANSWER✅✅✅-Find the PVs of the eleven different cash
flows and sum the results.
-Use the equation for PV of an annuity to value the $4,000 payments, and then use the equation for PV
of a lump sum to value the $24,000; then add the two results together.
-Solve using a financial calculator and use all five TVM buttons
If only one payment in a long series of annuity cash flows is slightly higher than all the rest, the internal
rate of return (IRR) will still be accurate by solving by the "I/Y" button on the calculator. - CORRECT
ANSWER✅✅✅False
Interest Rate, Required Return, (Required) Rate of Return, Opportunity Cost, and Discount Rate are
essentially the same concepts, and all deal with risk-adjustment. - CORRECT ANSWER✅✅✅True
What would the value of these payments be to a lender who can earn 6% annual interest on other
loans?
- 30 years of monthly payments (360 payments)
- $1,000 each payment - CORRECT ANSWER✅✅✅166,791.61
What would be the fixed level payment on the following $166,791.61 loan?
- Level payments
- 360 months
- 8% per year - CORRECT ANSWER✅✅✅$1,223.86
, What would be the fixed level payment on the following $100,000 loan?
- 15 years
- monthly payments
- 6% annual rate - CORRECT ANSWER✅✅✅843.86
Suppose you have a $100,000 fixed-rate level-payment mortgage as follows. What is the ending balance
of the loan after the first monthly payment?
- 15 year amortized term
- 6% annual interest - CORRECT ANSWER✅✅✅$99,656.14
The most popular type of mortgage in the United States is the - CORRECT ANSWER✅✅✅30-Year
Fixed-Rate Fully-Amortized Mortgage
Suppose your friend needs to borrow money to invest in real estate, and you are deciding whether or
not to lend them the money. Your friend promises to return the money in a lump sum 20 years from
now, along with a lump sum of $100,000 in interest (a total of $110,000 as a lump sum payment.) What
is the Present Value of this investment at a 12% required rate of return? - CORRECT
ANSWER✅✅✅$11,403.34
Suppose your friend needs exactly $10,000 to invest in real estate, and you are deciding whether or not
to lend them the money. You learned about net present value as a decision making tool, and want to
put it to use. Your friend promises to return the money in a lump sum 20 years from now, along with a
lump sum of $100,000 in interest (a total of $110,000.) You believe you could gain an annual return of
12% through similar-risk alternative investments over that same 20 years. What is the Net Present Value
of your friend's proposal?
Enter a whole number below, with no dollar sign (no "$"), rounding to the nearest whole number, and
using the "-" sign if negative, but no sign if positive. Commas, as always, are optional - CORRECT
ANSWER✅✅✅1403
Given the following information on an interest-only mortgage, calculate the monthly mortgage
payment: loan amount: $50,000; term: 15 years; interest rate: 4.2%
Enter the answer below as a positive number, no dollar sign, and two decimal places. - CORRECT
ANSWER✅✅✅175
Value of a property depends on all but which of the following? - CORRECT ANSWER✅✅✅Calendar
dates of expected cash flows
The bank lends a person $100,000 through a 15-year fixed rate mortgage with an interest rate of 6%. If
the mortgage was to be paid (and was compounded) monthly, the calculator entry for "N" would be -
CORRECT ANSWER✅✅✅180
If you were offered an investment that paid out exactly $4,000 each year for 10 years, and at the end of
the 10th year paid an extra lump sum amount of $24,000, which of the following calculations would
suffice to find present value (PV) - CORRECT ANSWER✅✅✅-Find the PVs of the eleven different cash
flows and sum the results.
-Use the equation for PV of an annuity to value the $4,000 payments, and then use the equation for PV
of a lump sum to value the $24,000; then add the two results together.
-Solve using a financial calculator and use all five TVM buttons
If only one payment in a long series of annuity cash flows is slightly higher than all the rest, the internal
rate of return (IRR) will still be accurate by solving by the "I/Y" button on the calculator. - CORRECT
ANSWER✅✅✅False
Interest Rate, Required Return, (Required) Rate of Return, Opportunity Cost, and Discount Rate are
essentially the same concepts, and all deal with risk-adjustment. - CORRECT ANSWER✅✅✅True
What would the value of these payments be to a lender who can earn 6% annual interest on other
loans?
- 30 years of monthly payments (360 payments)
- $1,000 each payment - CORRECT ANSWER✅✅✅166,791.61
What would be the fixed level payment on the following $166,791.61 loan?
- Level payments
- 360 months
- 8% per year - CORRECT ANSWER✅✅✅$1,223.86
, What would be the fixed level payment on the following $100,000 loan?
- 15 years
- monthly payments
- 6% annual rate - CORRECT ANSWER✅✅✅843.86
Suppose you have a $100,000 fixed-rate level-payment mortgage as follows. What is the ending balance
of the loan after the first monthly payment?
- 15 year amortized term
- 6% annual interest - CORRECT ANSWER✅✅✅$99,656.14
The most popular type of mortgage in the United States is the - CORRECT ANSWER✅✅✅30-Year
Fixed-Rate Fully-Amortized Mortgage
Suppose your friend needs to borrow money to invest in real estate, and you are deciding whether or
not to lend them the money. Your friend promises to return the money in a lump sum 20 years from
now, along with a lump sum of $100,000 in interest (a total of $110,000 as a lump sum payment.) What
is the Present Value of this investment at a 12% required rate of return? - CORRECT
ANSWER✅✅✅$11,403.34
Suppose your friend needs exactly $10,000 to invest in real estate, and you are deciding whether or not
to lend them the money. You learned about net present value as a decision making tool, and want to
put it to use. Your friend promises to return the money in a lump sum 20 years from now, along with a
lump sum of $100,000 in interest (a total of $110,000.) You believe you could gain an annual return of
12% through similar-risk alternative investments over that same 20 years. What is the Net Present Value
of your friend's proposal?
Enter a whole number below, with no dollar sign (no "$"), rounding to the nearest whole number, and
using the "-" sign if negative, but no sign if positive. Commas, as always, are optional - CORRECT
ANSWER✅✅✅1403
Given the following information on an interest-only mortgage, calculate the monthly mortgage
payment: loan amount: $50,000; term: 15 years; interest rate: 4.2%
Enter the answer below as a positive number, no dollar sign, and two decimal places. - CORRECT
ANSWER✅✅✅175
