Question 1

If the Loan/Value ratio is 75%, what is the "Leverage Ratio"?

Accepted Answer

A)  0.25 
B)  1.0 
C)  2.0 
D)  4.0 
E)  5.0 
A)  0.25 
B)  1.0 
C)  2.0 
D)  4.0 
E)  5.0

Question 2

In the market described in the previous question, what would be the investment value IV) of a property whose initial PBTCF is $100/yr, for an intra-marginal investor who faces a 10% tax rate and who would use the same 50% LTV financing?

Accepted Answer

A)  $1000 
B)  $1250 
C)  $1328 
D)  $1406. 
A)  $1000 
B)  $1250 
C)  $1328 
D)  $1406.

Question 3

Assuming riskless debt, if the return risk is ±10% with a 50% Loan/Value Ratio, then with a 75% Loan/Value Ratio the return risk is:

Accepted Answer

A)  ± 7.5% 
B)  ± 10.0% 
C)  ± 15.0% 
D)  ± 17.5% 
E)  ± 20.0% 
A)  ± 7.5% 
B)  ± 10.0% 
C)  ± 15.0% 
D)  ± 17.5% 
E)  ± 20.0%

Question 4

According to the WACC Formula, if the Loan/Value Ratio is 50% and the appreciation on the Loan is 0%, and the appreciation in the equity value is 10%, then the appreciation in the property value is:

Accepted Answer

A)  0% 
B)  5% 
C)  10% 
D)  Cannot be determined from the information given. 
A)  0% 
B)  5% 
C)  10% 
D)  Cannot be determined from the information given.

Question 5

If the market's required risk premium on the return to equity is 6% with a 50% loan/value ratio, what is the required equity risk premium with a 70% loan/value ratio? Assume riskless debt at either L/V ratio.)

Accepted Answer

L/V)RPD + 1 - L/V)RPE = RP.5)0

Question 6

The NOI is $120,000, the debt service is $90,000 of which $85,000 is interest, the depreciation expense is $45,000. What is the Before-tax and After-tax Cash Flow to the equity investor EBTCF, & EATCF) if there are no capital improvement expenditures or reversion items this period, and the income tax rate is 35%?

Accepted Answer

120000-90000 = $30,0

Question 7

After-tax cash flow will exceed before-tax cash flow whenever:

Accepted Answer

A)  Taxable income is negative. 
B)  Capital expenditures exceed net operating income. 
C)  The building is fully depreciated. 
D)  Interest and depreciation expenses are less than net operating income. 
A)  Taxable income is negative. 
B)  Capital expenditures exceed net operating income. 
C)  The building is fully depreciated. 
D)  Interest and depreciation expenses are less than net operating income.

If the Loan/Value ratio is 75%, what is the "Leverage Ratio"?

In the market described in the previous question, what would be the investment value IV) of a property whose initial PBTCF is $100/yr, for an intra-marginal investor who faces a 10% tax rate and who would use the same 50% LTV financing?

Assuming riskless debt, if the return risk is ±10% with a 50% Loan/Value Ratio, then with a 75% Loan/Value Ratio the return risk is:

According to the WACC Formula, if the Loan/Value Ratio is 50% and the appreciation on the Loan is 0%, and the appreciation in the equity value is 10%, then the appreciation in the property value is:

If the market's required risk premium on the return to equity is 6% with a 50% loan/value ratio, what is the required equity risk premium with a 70% loan/value ratio? Assume riskless debt at either L/V ratio.)

After-tax cash flow will exceed before-tax cash flow whenever:

Real Estate Space and Asset Markets

Real Estate System

Central Place Theory and the System of Cities

Inside the City I: Some Basic Urban Economics

Real Estate Market Analysis

Real Estate as an Investment: Some Background Information

Present Value Mathematics for Real Estate

Measuring Investment Performance: The Concept of Returns

The Basic Idea: DCF and NPV

Nuts and Bolts for Real Estate Valuation: Cash Flow Proformas and Discount Rates

Advanced Micro-Level Valuation

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Exam 5: Inside the City II: A Closer Look

If the Loan/Value ratio is 75%, what is the "Leverage Ratio"?

In the market described in the previous question, what would be the investment value IV) of a property whose initial PBTCF is $100/yr, for an intra-marginal investor who faces a 10% tax rate and who would use the same 50% LTV financing?

Assuming riskless debt, if the return risk is ±10% with a 50% Loan/Value Ratio, then with a 75% Loan/Value Ratio the return risk is:

According to the WACC Formula, if the Loan/Value Ratio is 50% and the appreciation on the Loan is 0%, and the appreciation in the equity value is 10%, then the appreciation in the property value is:

If the market's required risk premium on the return to equity is 6% with a 50% loan/value ratio, what is the required equity risk premium with a 70% loan/value ratio? Assume riskless debt at either L/V ratio.)

After-tax cash flow will exceed before-tax cash flow whenever:

Real Estate Space and Asset Markets

Real Estate System

Central Place Theory and the System of Cities

Inside the City I: Some Basic Urban Economics

Real Estate Market Analysis

Real Estate as an Investment: Some Background Information

Present Value Mathematics for Real Estate

Measuring Investment Performance: The Concept of Returns

The Basic Idea: DCF and NPV

Nuts and Bolts for Real Estate Valuation: Cash Flow Proformas and Discount Rates

Advanced Micro-Level Valuation

Filters