Certified General Appraiser Latest Exam Prep Test
Bank 2 with 620 Questions and Correct Verified
Answers with Rationales/ 2026-2027 Newest Prep Test
Bank for Certified General Appraiser Exam
A property was purchased for $1,200,000. It had first year net operating income of
$110,500 increasing annually by 3% for the term of the lease which ends in 10
years. The property was financed with a 70% loan, a 7% interest rate, and a twenty
year term with monthly payments. The property was sold at the end of year 5 with
a reversion based on a capitalization rate of 9.3% applied to year 6 income. Cost of
sale for the reversion is projected to be 5% of the gross sale proceeds. What is the
yield to the lender?
a. 9.8%
b. 9.5%
c. 7%
d. 6.8% - Correct Answer: C
The lender's yield is the interest rate. The lender is not participating in the income
or sale benefits of this investment.
the loan to value ratio is 75%. the mortgage interest rate is 6.25 with payments
made monthly over a 20 year term. the loan is fully amortizing. if the overall
capitalization rate is 9.5, what is the equity dividend rate?
a .6578
b. .8771
1
,c. .1168
d. .2921 - correct answer: c
mortgage-equity band of investment
20gn
6.25gi
1pv
pmt = .007309282 monthly mortgage constant
.007309282 x 12 = .087711384 annual mortgage constant rm).
087711384 x .75 = .0657835 weighted value of the financing
.095 - .0657835 = .02921646 weighted value of the equity
.02921646/.25 = .11686584 equity dividend rate
the assignment is to value an unimproved property in an area being developed into
a subdivision. a summary of the potential net cash flows for a subdivision
development on the subject property is presented below.
year 1: -$50,000
year 2: -$15,000
year 3: $130,000
year 4: $125,000
year 5: $75,000
assuming a discount rate of 26%, what is the value of the undeveloped land
(rounded to the nearest $1,000)?
2
,a. $89,000
b. $99,000
c. $129,000
d. $187,000 - correct answer: a
26 i
50,000 chs g cfj
15,000 chs g cfj
130,000 g cfj
125,000 g cfj
75,000 g cfjf
npv = 89,066
potential uses are being considered for development. based on the following
information, which investment alternative is the highest and best use of the site?
cost to construct: $400,000.00 (apartment), $290,000.00 (retail), $350,000.00
(office)
net operating income: $100,000.00 (apartment), $80,000.00 (retail), $95,000.00
(office)
return on building: 12% (apartment), 12% (retail), 12% (office)
apartment.
retail.
3
, office.
all of the above. - correct answer: c
apartment: 400,000 x .12 = 48,000
100,000 - 48,000 = 52,000
retail: 290,000 x .12 = 34,800
80,000 - 34,800 = 45,200
office: 350,000 x .12 = 42,000
95,000 - 42,000 = 53,000
this is an application of the land residual income capitalization technique. the use
that generates the greatest residual income to land is considered the highest and
best use. in this example, note the apartment is an overimprovement and the retail
is an underimprovement based on construction costs.
buildings that cost more to build than the site's highest and best use are:
a. overimprovements.
b. single-family homes.
c. nonconforming uses.
d. underimprovements. - a. overimprovements.
b. single-family homes.
c. nonconforming uses.
d. underimprovements.
4
Bank 2 with 620 Questions and Correct Verified
Answers with Rationales/ 2026-2027 Newest Prep Test
Bank for Certified General Appraiser Exam
A property was purchased for $1,200,000. It had first year net operating income of
$110,500 increasing annually by 3% for the term of the lease which ends in 10
years. The property was financed with a 70% loan, a 7% interest rate, and a twenty
year term with monthly payments. The property was sold at the end of year 5 with
a reversion based on a capitalization rate of 9.3% applied to year 6 income. Cost of
sale for the reversion is projected to be 5% of the gross sale proceeds. What is the
yield to the lender?
a. 9.8%
b. 9.5%
c. 7%
d. 6.8% - Correct Answer: C
The lender's yield is the interest rate. The lender is not participating in the income
or sale benefits of this investment.
the loan to value ratio is 75%. the mortgage interest rate is 6.25 with payments
made monthly over a 20 year term. the loan is fully amortizing. if the overall
capitalization rate is 9.5, what is the equity dividend rate?
a .6578
b. .8771
1
,c. .1168
d. .2921 - correct answer: c
mortgage-equity band of investment
20gn
6.25gi
1pv
pmt = .007309282 monthly mortgage constant
.007309282 x 12 = .087711384 annual mortgage constant rm).
087711384 x .75 = .0657835 weighted value of the financing
.095 - .0657835 = .02921646 weighted value of the equity
.02921646/.25 = .11686584 equity dividend rate
the assignment is to value an unimproved property in an area being developed into
a subdivision. a summary of the potential net cash flows for a subdivision
development on the subject property is presented below.
year 1: -$50,000
year 2: -$15,000
year 3: $130,000
year 4: $125,000
year 5: $75,000
assuming a discount rate of 26%, what is the value of the undeveloped land
(rounded to the nearest $1,000)?
2
,a. $89,000
b. $99,000
c. $129,000
d. $187,000 - correct answer: a
26 i
50,000 chs g cfj
15,000 chs g cfj
130,000 g cfj
125,000 g cfj
75,000 g cfjf
npv = 89,066
potential uses are being considered for development. based on the following
information, which investment alternative is the highest and best use of the site?
cost to construct: $400,000.00 (apartment), $290,000.00 (retail), $350,000.00
(office)
net operating income: $100,000.00 (apartment), $80,000.00 (retail), $95,000.00
(office)
return on building: 12% (apartment), 12% (retail), 12% (office)
apartment.
retail.
3
, office.
all of the above. - correct answer: c
apartment: 400,000 x .12 = 48,000
100,000 - 48,000 = 52,000
retail: 290,000 x .12 = 34,800
80,000 - 34,800 = 45,200
office: 350,000 x .12 = 42,000
95,000 - 42,000 = 53,000
this is an application of the land residual income capitalization technique. the use
that generates the greatest residual income to land is considered the highest and
best use. in this example, note the apartment is an overimprovement and the retail
is an underimprovement based on construction costs.
buildings that cost more to build than the site's highest and best use are:
a. overimprovements.
b. single-family homes.
c. nonconforming uses.
d. underimprovements. - a. overimprovements.
b. single-family homes.
c. nonconforming uses.
d. underimprovements.
4
