Quiz #1 IAAO Course 102 with 100% correct answers

Capitalization is the process used to: convert income into an estimate of value fixed-rate mortgage A loan secured by real property featuring an interest rate that is constant for the term of the loan is referred to as a (an): anticipation The underlying principle providing the basis of the income capitalization approach is: income divided by rate equals value The basic equation used in the income approach to value is: deficit rent When market rent exceeds contract rent the difference is known as: market rent The rental income that a property would most probably command in the open market is called effective gross income The anticipated income from all operations of the property adjusted for vacancy and collection losses, and miscellaneous income is called: 0.47 If an income property has an annual effective gross income of $64,000 with total expenses of $30,000 and variable expenses of $17,000, what is the operating expense ratio? 44 percent operating expenses are $205,000, what is the operating expense ratio (rounded)? potential gross income is $500,000. The vacancy and collection loss allowance is 6 percent. If I n reconstructing an income statement for an apartment complex, you estimate that the $360,000; $349,200; $237,456 The subject is an office building which contains 30,000 square feet of building area, and 24,000 square feet of net rentable area. The market rent for similar space is $15.00 per square foot of net rentable area. Vacancy and collection losses are 3% of potential gross income. Operating expenses are 32% of effective gross income , and the sales price 2,793,600. 44 percent In reconstructing an income stmt for an apartment complex you esyimate that the potential gross income is $500,000. The vacancy and collection loss allowance is 6%. If operating expenses are $205,000 what is the operating expense ration (rounded)? 1.11 A property has a net operating income of $10,000, interest payments of $8,000 and principal payments of $1,000. What is the debt coverage ratio? Given the following information: Building capitalization rate: 0.11 Land capitalization rate: 0.09 Land value as a percent of total value: 35 percent What is the overall capitalization rate by using the band-of-investment method? 12.50 % An apartment house is valued at $420,000 and has a net income of $2,800 per month. Calculate the overall capitalization rate for the investment. effective rent The lease base rent less rent concessions is called: effective tax rate The rate that is the percentage that annual real estate taxes are in relation to the property's total value is: net income ratio The ratio of net operating income gross income is called Annually The mortgage capitalization rate (Rw) is the ratio between the payments of principal and interest on a mortgage to the original amount borrowed and is expressed: 0.09 What the overall capitalization rate (Ro) from the following information which you have developed from sales comparables in the your subject property? Potential gross income $ 1,545,000 ; Vacancy and collection loss rate Operating expenses = $ 543,068 ; Effective gross income multiplier = 7.0 0.112 You have determined that typical properties, like the subject you are appraising, are financed with 60 % debt and 40 % equity . From discussions with lenders and investors you have found typical financing terms require 8% of amt borrowed be paid annually to amortize the loan and typical equity dividend rate (or equity cap. rate) would be 0.11 for the equity investor. The effectice tax rate for the jurisdiction is 2%. From this develop an overall cap. rate applicable to subject property. Lease A written document in which the rights to use and occupy land or structures are transferred by the