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

1. The subject property is a 22-year-old building that just sold for $654,000 (cash). The estimated land value (VL) is $250,000, and the value of the site improvements is $25,000. The cost of construction is $675,000. What is the annual rate of depreciation on a percentage basis?

a) 1.0%

b) 2.0%

c) 3.0%

d) 4.0%

2. If an extraction of depreciation shows an annual depreciation percentage of 2.5% per year, what is the indicated total economic life?

a) 25 years

b) 30 years

c) 35 years

d) 40 years

3. What is the internal rate of return for a property that was purchased for $450,000; had net operating incomes of $45,000, $52,000, $56,000, $56,000, $56,000 and $60,000 per year; and was sold for $407,000 at the end of the sixth year? The periodic cash flows are payable in arrears. Round your answer to the nearest percent.

a) 9%

b) 10%

c) 11%

d) 12%

4. Calculate the resale price that is necessary to achieve a yield rate of 11% on the following investment (choose the closest answer), given the following data:

• Purchase price = $150,000; NOI (level) = $7,000; Projection period = 5 years

a) $200,000

b) $210,000

c) $220,000

d) $250,000

5. What is the internal rate of return (IRR) on an investment with the following cash flows? Round your answer to the nearest 0.25%

Year	Net Income
Purchase price	$4,000,000
1	$ 250,000
2	$ 300,000
3	$ 350,000
4	$ 400,000
5	$ 450,000
Resale	$4,750,000 (net of costs)

a) 6.25%

b) 10.00%

c) 12.50%

d) 11.50%

6. A new building cost $2,234,500 to build seven years ago. The cost service calculation shows that it would cost $2,987,500 to construct this building today. What is the straight-line annual rate of increase shown by this calculation?

a) 3.98%

b) 4.24%

c) 4.81%

d) 33.69%

7. The subject building was reported to cost $4,560,000 when it was built 11 years ago. The comparative multiplier for the subjects area in the year of construction was 1.5656. Determine the cost estimate as of today using cost index trending and straight-line calculations.

a) $2,912,500

b) $4,560,000

c) $5,039,500

d) $7,139,000

8. The subject property is a 22-year-old building that just sold for $654,000 (cash). The estimated land value (VL) is $250,000, and the value of the site improvements is $25,000. The cost of construction is $675,000. What is the annual rate of depreciation on a percentage basis?

a) 1.0%

b) 2.0%

c) 3.0%

d) 4.0%

9. A comparable property sold for $989,000 with no concessions. The site value was estimated at $75,000, and the site improvements have a contributory value of $10,000. The cost to construct the building was $1,000,000. What is the percentage of depreciation?

a) 8.50%

b) 9.60%

c) 9.89%

d) 10.00%

10. A property sold for $743,000. The sale was arms-length and had no concessions, and there were no expenditures immediately after the sale. The appraisers opinion of the site value (VL) was $94,000, and the site improvements (VSI) have a contributory value of $10,000. If the building cost is $700,000 and the building is six years old, what is the implied economic life?

a) 62

b) 69

c) 72

d) 88

11. A comparable sale has a sale price of $500,000 (VO) and a lot value of $80,000 (VL). The site improvements (VSI) have a contributory value of $15,000, and the cost of construction of the house is $500,000. What is the implied economic life if the house is 18 years old?

a) 22

b) 75

c) 85

d) 95