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Section 5 part 5 Math Exam Questions And Answers
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Section 5 part 5 Math Exam Questions And Answers A rental home recently sold for $342,000. It rents for $1,800 per month. A nearby home rents for $1,500 per month. What would you expect this nearby home to be worth? - ANS $342,000 divided by $1,800 = 190 gross rent multiplier. $1...

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  • October 29, 2024
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Section 5 part 5 Math Exam Questions
And Answers


A rental home recently sold for $342,000. It rents for $1,800 per month. A nearby home rents for
$1,500 per month. What would you expect this nearby home to be worth? - ANS $342,000
divided by $1,800 = 190 gross rent multiplier. $1,500 X 190 = $285,000.
The correct answer is: $285,000.

An investor is considering the purchase of a duplex. He plans to pay all cash. If he believes he
can net $1,500 per unit per month after expenses, he can pay up to what amount for the duplex
if he wants to receive an 8% rate of return on his investment? - ANS $1,500 monthly rent X
2 units X 12 months = $36,000 annual net income. $36,000 divided by .08 = $450,000
maximum price.
The correct answer is: $450,000.

A 50-unit apartment complex rents for an average of $1,800 per unit per month. The vacancy
factor is 6%. Operating expenses run 55% of effective gross income. What would be the value
of this apartment complex when using an 11% capitalization rate? - ANS Potential Gross
Income of $1,080,000 (50 X $1,800 X 12) - Less Vacancies of $64,800 ($1,080,000 X .06) =
Effective Gross Income of $1,015,200 ($1,080,000 - 64,800) - Operating Expenses of $558,360
($1,015,200 X .55) = Net Operating Income of $458,840 ($1,015,200 - $558,360). $458,840
divided by .11 = $4,153,000 (rounded).
The correct answer is: $4,153,000.

If a person bought a house for $180,000 and the value increased by 5% each year for three
years, what would be the value of that house after the 3 years? - ANS $180,000 X1.05 X
1.05 X 1.05 = $208,372.50.
The correct answer is: $208,372.50.

An owner receives $37,500 per year net income on an investment of $495,000. What is the
owner's capitalization rate? - ANS Solution: Income / value = % return $37,500 / $495,000
= .0757575 or 7.6%.
The correct answer is: 7.6%

A property was purchased for $115,000 and has appreciated 8% each year over the value the
previous year for the last five years. What is its present value? - ANS Year 1: 115,000 x
1.08 = 124,200.00. Year 2: 124,200 x 1.08 = 134,136.00. Year 3: 134,136 x 1.08 = 144,866.88.

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