#1 MULTIPLE CHOICE (no need to show work but please get right)

1. A property has a net operating income of $25,000 and the capitalization rate used in the market is 10%. What is the indicated value?

a) $250,000

b) $300,000

c) $325,000

d) $2,500,000

2. A property sold for $555,000. The buyer anticipated that the potential gross income (PGI) would be $93,000, the vacancy would be 5%, and expenses would be 35% of the effective gross income (EGI) in the year after purchase. What is the overall capitalization rate (RO)? Round your answer to the nearest 0.5%.

a) 9.5%

b) 10.0%

c) 10.5%

d) 11.0%

3. In a soft market, a landlord accepted a new tenant with a 60-month lease at $5,000 per month but gave the new tenant six months of free rent before the lease started. Use the average (straight-line) rent method to calculate the effective monthly rent.

a) $4,500

b) $4,545

c) $5,000

d) $5,555

4. The subject property sold for $895,000. The appraiser estimated the PGI to be $154,000 and the vacancy and collection loss to be 5%. What is the potential gross income multiplier (PGIM)?

a) 0.1635

b) 0.1721

c) 5.8117

d) 6.1176

5. A tenant has a lease stating that the base rent is $5,000 per month plus 3% of the sales above $600,000 in gross sales per year. The tenants sales last year were $850,000. How much rent was due last year?

a) $25,500

b) $60,000

c) $67,500

d) $75,000

6. A comparable property recently sold for $217,000 with a cash payment. The buyer had to put a new roof covering on the building within a month of purchase. She knew it needed a roof when she bought it. The cost of the roof was estimated at $23,000. The property rents for $2,200 per month. What is the correct GRM?

a) 18.88

b) 98.64

c) 109.09

d) 888.18

7. A property has a net income of $36,000 per year. The operating expense ratio (OER) is 36%. The vacancy and collection loss is estimated to be 4%. What is the EGI?

a) $12,960

b) $13,478

c) $56,250

d) $58,594

8. If a property has an OER of 42% and the net operating income (NOI) is $49,500, what is the EGI?

a) $20,790

b) $28,710

c) $85,345

d) $117,857

9. What is the market value of a property with an NOI of $33,000, vacancy and collection losses of $4,000, and operating expenses of $12,000 in a market where the PGIM is 9? Round your answer to the nearest $25,000.

a) $400,000

b) $425,000

c) $450,000

d) $500,000

10. A sale of a net leased property was verified at $150,000 cash. The lease calls for seven annual rental payments (in arrears) of $18,000. What discount rate is reflected for the leased fee interest if the property is expected to be worth $150,000 at the end of the lease? Round your answer to the nearest even percent.

a) 10%

b) 11%

c) 12%

d) 13%