CCIM 101 PRACTICE EXAM QUESTIONS AND ANSWERS
GRADED A+
✔✔Psychographics (TAPESTRY by STDB.com) - ✔✔Data segments based on
consumption patterns (rather than demographic factors like race or age) that are used
to target marketing and inform development decisions; grouped into LifeModes that
describe various market segments (e.g., affluent estates, upscale avenues).
✔✔The Cash Flow Model - ✔✔A financial analysis tool used to evaluate an
investment's profit potential by detailing: 1. Initial investment 2. Cash flows (CFs) from
operations during the holding period 3. Cash flow from disposition 4. Holding period. It
reflects the time value of money (TVM) by quantifying both the amounts and timing of
CFs.
✔✔Time Value of Money (TVM) - ✔✔The concept that money available today is worth
more than the same amount in the future due to its earning potential, inflation, and lower
risk. TVM calculations answer questions such as the future worth of an investment
made today and the present value of a future payment.
✔✔TVM T-Bar - ✔✔A tool that organizes the timing and amounts of cash flows, helping
to answer the basic questions: how much money goes into an investment, when it goes
in, how much comes out, and when it comes out.
✔✔Six Functions of the Dollar - ✔✔Key functions in financial calculations: 1.
Compounding a single amount to a future value (FV) 2. Compounding an annuity to a
future value 3. Calculating sinking fund payments 4. Discounting a single future amount
to a present value (PV) 5. Discounting an annuity to a present value 6. Determining a
series of equal payments to amortize a present value. Best solved by converting word
problems into a T-bar format and using a financial calculator.
✔✔Sinking Funds - ✔✔A series of equal periodic payments set aside to reach a future
target amount (lump-sum FV). Commonly used for planning capital expenditures (e.g.,
roof replacement, heating plant upgrades) or personal savings goals (college funds,
retirement).
✔✔DCF Analysis (Discounted Cash Flow Analysis) - ✔✔A method that builds a cash
flow model (often using a T-bar) by placing all cash flows (with their timing), then
discounting them to calculate the net present value (NPV) or internal rate of return
(IRR). It is used to compare investment alternatives based on their risk and timing of
cash flows.
✔✔IRR (Internal Rate of Return) - ✔✔The discount rate at which the net present value
of all cash flows (both incoming and outgoing) from an investment equals zero. IRR
represents the rate of return each dollar earns during the holding period. Pros: Clarifies
, the timing and amount of cash flows. Cons: May not fully account for external factors,
reinvestment rates of CFs, or differences in initial investment sizes and holding periods.
✔✔NPV (Net Present Value) - ✔✔The sum of the discounted values of all cash flows,
including the initial outlay. A positive NPV indicates that an investment is expected to
exceed the desired yield, a negative NPV suggests it will not, and a zero NPV means it
exactly meets the yield requirement.
✔✔Compounding and Discounting - ✔✔Compounding: The process of calculating the
future value of an investment made today (or a series of equal payments) by reinvesting
earned interest. Discounting: The process of determining the present value of future
money, reflecting the loss of potential earnings while waiting to receive it.
✔✔DCF Components - ✔✔N: Number of periods; I/Y: Periodic interest rate; PV: Present
value (single sum today); PMT: Equal periodic payments; FV: Future value (lump sum
at a future date).
✔✔Cash Flow Model (Overview) - ✔✔A framework that combines financial analysis
techniques with RE market forecasts, incorporating judgments and research to quantify
both the amounts and timing of cash flows (CFs). It addresses four key questions: 1.
How many dollars go into the investment? 2. When do the dollars go in? 3. How many
dollars come out? 4. When do they come out? It includes four components: initial
investment, periodic CFs from operations, CFs from disposition, and the holding period.
Analyses can be done without/with financing and before/after tax.
✔✔Without Financing/Before Tax Analysis - ✔✔The most basic RE CF analysis where:
Initial Investment: Purchase price plus acquisition costs.
✔✔Annual CFs - ✔✔Equal to Net Operating Income (NOI), which is derived from gross
operating income (GOI) minus operating expenses (OpEx).
✔✔Sale Proceeds (BT) - ✔✔Sale price minus cost of sale.
✔✔Holding Period - ✔✔The time the investment is held.
✔✔Net Operating Income (NOI) - ✔✔The annual income generated by an income-
producing property after all operating expenses are deducted from gross operating
income. It is calculated as: 1. Potential Rental Income (PRI) minus Vacancy and Credit
Losses = Effective Rental Income. 2. Effective Rental Income plus Other Income =
Gross Operating Income (GOI). 3. GOI minus OpEx = NOI. NOI is used by lenders,
investors, and appraisers to gauge property performance.
✔✔Potential Rental Income (PRI) - ✔✔The total rent a property could generate if 100%
occupied under the lease terms or, if vacant, based on comparable market rents.
GRADED A+
✔✔Psychographics (TAPESTRY by STDB.com) - ✔✔Data segments based on
consumption patterns (rather than demographic factors like race or age) that are used
to target marketing and inform development decisions; grouped into LifeModes that
describe various market segments (e.g., affluent estates, upscale avenues).
✔✔The Cash Flow Model - ✔✔A financial analysis tool used to evaluate an
investment's profit potential by detailing: 1. Initial investment 2. Cash flows (CFs) from
operations during the holding period 3. Cash flow from disposition 4. Holding period. It
reflects the time value of money (TVM) by quantifying both the amounts and timing of
CFs.
✔✔Time Value of Money (TVM) - ✔✔The concept that money available today is worth
more than the same amount in the future due to its earning potential, inflation, and lower
risk. TVM calculations answer questions such as the future worth of an investment
made today and the present value of a future payment.
✔✔TVM T-Bar - ✔✔A tool that organizes the timing and amounts of cash flows, helping
to answer the basic questions: how much money goes into an investment, when it goes
in, how much comes out, and when it comes out.
✔✔Six Functions of the Dollar - ✔✔Key functions in financial calculations: 1.
Compounding a single amount to a future value (FV) 2. Compounding an annuity to a
future value 3. Calculating sinking fund payments 4. Discounting a single future amount
to a present value (PV) 5. Discounting an annuity to a present value 6. Determining a
series of equal payments to amortize a present value. Best solved by converting word
problems into a T-bar format and using a financial calculator.
✔✔Sinking Funds - ✔✔A series of equal periodic payments set aside to reach a future
target amount (lump-sum FV). Commonly used for planning capital expenditures (e.g.,
roof replacement, heating plant upgrades) or personal savings goals (college funds,
retirement).
✔✔DCF Analysis (Discounted Cash Flow Analysis) - ✔✔A method that builds a cash
flow model (often using a T-bar) by placing all cash flows (with their timing), then
discounting them to calculate the net present value (NPV) or internal rate of return
(IRR). It is used to compare investment alternatives based on their risk and timing of
cash flows.
✔✔IRR (Internal Rate of Return) - ✔✔The discount rate at which the net present value
of all cash flows (both incoming and outgoing) from an investment equals zero. IRR
represents the rate of return each dollar earns during the holding period. Pros: Clarifies
, the timing and amount of cash flows. Cons: May not fully account for external factors,
reinvestment rates of CFs, or differences in initial investment sizes and holding periods.
✔✔NPV (Net Present Value) - ✔✔The sum of the discounted values of all cash flows,
including the initial outlay. A positive NPV indicates that an investment is expected to
exceed the desired yield, a negative NPV suggests it will not, and a zero NPV means it
exactly meets the yield requirement.
✔✔Compounding and Discounting - ✔✔Compounding: The process of calculating the
future value of an investment made today (or a series of equal payments) by reinvesting
earned interest. Discounting: The process of determining the present value of future
money, reflecting the loss of potential earnings while waiting to receive it.
✔✔DCF Components - ✔✔N: Number of periods; I/Y: Periodic interest rate; PV: Present
value (single sum today); PMT: Equal periodic payments; FV: Future value (lump sum
at a future date).
✔✔Cash Flow Model (Overview) - ✔✔A framework that combines financial analysis
techniques with RE market forecasts, incorporating judgments and research to quantify
both the amounts and timing of cash flows (CFs). It addresses four key questions: 1.
How many dollars go into the investment? 2. When do the dollars go in? 3. How many
dollars come out? 4. When do they come out? It includes four components: initial
investment, periodic CFs from operations, CFs from disposition, and the holding period.
Analyses can be done without/with financing and before/after tax.
✔✔Without Financing/Before Tax Analysis - ✔✔The most basic RE CF analysis where:
Initial Investment: Purchase price plus acquisition costs.
✔✔Annual CFs - ✔✔Equal to Net Operating Income (NOI), which is derived from gross
operating income (GOI) minus operating expenses (OpEx).
✔✔Sale Proceeds (BT) - ✔✔Sale price minus cost of sale.
✔✔Holding Period - ✔✔The time the investment is held.
✔✔Net Operating Income (NOI) - ✔✔The annual income generated by an income-
producing property after all operating expenses are deducted from gross operating
income. It is calculated as: 1. Potential Rental Income (PRI) minus Vacancy and Credit
Losses = Effective Rental Income. 2. Effective Rental Income plus Other Income =
Gross Operating Income (GOI). 3. GOI minus OpEx = NOI. NOI is used by lenders,
investors, and appraisers to gauge property performance.
✔✔Potential Rental Income (PRI) - ✔✔The total rent a property could generate if 100%
occupied under the lease terms or, if vacant, based on comparable market rents.
