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FIN 3713 Exam 3, Financial Accounting Questions and Complete Solutions Graded A+
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FIN 3713 Exam 3, Financial Accounting Questions and Complete Solutions Graded A+
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FIN 3713 Exam 3,Financial Accounting
Questions and Complete
Solutions Graded A+
Denning [Date] [Course title]
,Which is TRUE regarding the incremental Cost of Borrowing? - Answer: It should be compared to the
cost of obtaining a second mortgage
The Market Value of a loan is: - Answer: the present value of the remaining payment
A borrower finds that the incremental cost of borrowing an extra $10,000 is 14%. If a loan is obtained at
15% so the borrower would be better off by borrowing with the loan rate mortgage. - Answer: FALSE
A borrower is considering refinancing and finds that the return, considering refinancing loan payments,
is 10%. The borrower can earn 12% on alternative investments so the property... - Answer: FALSE
If interest rates decrease, the market value of a loan previously make will increase - Answer: TRUE
Lowest Effective Rent - Answer: 0, 13, 14, 15 ,16
A gross income multiplier can be calculated by dividing the gross income by the sales price - Answer:
FALSE
An overall capitalization rate can be calculated by dividing the net operating income by the property
value - Answer: TRUE
A property is purchased for $350,000. Based on an annual growth rate of 3%, the resale value for year
10 would be $456,671 - Answer: FALSE (1.03^10 x 350,000 = 470,370.73)
A property produces a first year NOI of $100,000 which is expected to grow by 2% per year. If the
property is expected to be sold in year 10, what is the expected sale price based on a terminal
capitalization rate applied to the eleventh year NOI? - Answer: $1,283,152
A loan was made 10 years ago for $140,000 at 10.5% for a 30 year term. Rates are currently ... what is
the market value of the loan? - Answer: $139,828
Bud is offering... - Answer: 9.39%
, If Kelsey... - Answer: Yes
When calculating the cash equivalent of an assumable loan, you find the present value of payments
using the - Answer: market interest rate
The supply of space is - Answer: relatively inelastic in the short run, and highly elastic in the long run
A gross lease is where tenants pay all expenses - Answer: FALSE
Net Operating Income is the income after deduction of mortgage payments - Answer: FALSE
Which is NOT part of the definition of market value? - Answer: The property has been on the open
market for less than a year
What does an appraisal tell about the value of a property? - Answer: An appraisal estimates value
Expenses for a 1,000 square foot office space are $6.00/square foot. The lease specifies an expense of
$5.40. What is the total expense paid by the landlord? - Answer: $5,400 (1000 x 5.40)
Income after deducting vacancy that is available to pay expenses is referred to as - Answer: effective
gross income
What does an expense stop do in a lease? - Answer: Expenses above the stop are paid by the tenant
You have 6 tenants paying $200/month. Market rents are now $250/month. What is lease you record
for each month? - Answer: $300 (6 x (250-200))
When lenders charge discount points (prepaid interest) on a loan, what impact does this have on the
lease yield? - Answer: The yield on the loan will increase
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