Exam (elaborations)
IAAO 112 QUESTIONS AND ANSWERS 2024
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IAAO 112 QUESTIONS AND ANSWERS 2024
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IAAO 112Equity yield rate Ye - ANSWERS-Rate of return on equity capital as distinguished
from the rate of return on debt capital, considers the effect of debt financing on
the cash flow to the equity investor
Equity dividend rate - ANSWERS-AKA equity capitalization rate,Most common
measure used by investors, uses before tax cash flow and is often referred to as
cash in cash return, calculated by (noi-debt service)\equity investment
Reversion - ANSWERS-Selling the property at the end of a holding period,
Represents the return of the capital investment that was made in the property,
represents the return OF the capital investment that was made in the property, if
the investment is not totally recaptured between the income stream and the
reversion, then the yield rate is actually negative.
Profitability index - ANSWERS-Measures the relationship between the projected
future benefits of a project or investment and the initial capital outlay, tool for
measuring the quality of a real property investment, formula is present value of
anticipated future benefits divided by initial investment.
Break even point - ANSWERS-The point where total income equals total expenses.
Holding period - ANSWERS-Length of time investor keeps a property
, Annuity - ANSWERS-Right to receive money or its equivalent in fixed equal
amounts and at regular intervals for a definite or indefinite term, can be level,
increasing, or decreasing.
Variable annuity - ANSWERS-Annuity that is not level
Ordinary annuity - ANSWERS-Income received at the end of each period
Annuity in advance - ANSWERS-Created by a lease that calls for payments to be
made at the beginning of each month
Duration - ANSWERS-How long income stream will last
terminal rate - ANSWERS-Used to calculate the reversionary value
Yield rate - ANSWERS-Return on investment applicable to a series of incomes that
results in the present worth of each
Debt service - ANSWERS-Includes both the interest and the principal payments
required to amortize the loan on the property.
Discount cash flow DCF - ANSWERS-Yield capitalization method used to calculate
the present value of anticipated future cash flows, isolates differences in the
timing of cash flows, year by year breakdown of future benefits noi an investor
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