UE/FALSE 1. When using the gross income multiplier approach to appraisal, potential gross income is preferred to effective gross income. 2. In the cost approach to value, land value can be estimated by comparing sales of vacant land that are similar to the subject land. MULTIPLE CHOICE 3. Which of the following statements regarding the sales oomparison approach to appraisal is TRUE? a. As a rule of thumb transactions involving foreclosures should be discounted by 10 percent location b. The comparable are more important that the comparable properties for performing the sales comparison c. The comparable sales must involve transactions between unrelated individuals of the buiding, d. only factors important for comparable analysis are property size, building size, age and the condition of building 4. a property with NOI of $72,000 and a debt coverage ratio of 1.2 applied to first year No. What would be the estimated monthly mortgage payment? a. $5,000 b. $7,200 c. $60,000 d. $86,400 5. A property is sold for $200,000. Typical financing terms are an loan with a 10% interest rate over 15 years. If the before-tax cash flow is $2,000, what is the overall capitalization rate? (A) 10.96% (B) 11.96% (C) 19.13% (D) 9.96% 6. Which of the following factors is NOT part of the definition of market value? (A) Payment is made in terms of cash in U.S. dollars or a comparable financial arrangement (B) The property has been on the open market for less than a year (C) Buyer and seller are typically motivated financing (D) Price is not affected by special or creative