In appraisal, accrued depreciation is really an estimate of __________.

A. physical deterioration
B. diminished utility
C. book depreciation
D. capital recovery
E. sinking fund factor
ANSWER: B

The cost approach NOT useful for __________.

A. checking value approaches
B. appraising institutional or special-use properties
C. estimating the value of new property
D. appraising older homes in an active market
E. insurance appraisals
ANSWER: C

An appraiser noted the following about a rental home: needs exterior paint 750 cost
to cure needs new water heater 250 cost to cure has one bath in market for two
4,000 capitalized rent loss has poor floor pan 2,500 capitalized rent loss is
located next to a convenience store 1,200 capitalized rent loss. How much is
curable physical deterioration?
A. 250
B. 750
C. 4,000
D. 2,500
E. none of the above
ANSWER: E

An appraiser noted the following about a rental home: needs exterior paint 750 cost
to cure needs new water heater 250 cost to cure has one bath in market for two
4,000 capitalized rent loss has poor floor pan 2,500 capitalized rent loss is
located next to a convenience store 1,200 capitalized rent loss. How much is
functional obsolescence?
A. 250
B. 750
C. 1,200
D. 2,500
E. 4,000
ANSWER: C

An appraiser noted the following about a rental home: needs exterior paint 750 cost
to cure needs new water heater 250 cost to cure has one bath in market for two
4,000 capitalized rent loss has poor floor pan 2,500 capitalized rent loss is
located next to a convenience store 1,200 capitalized rent loss. How much is
environmental obsolescence?
A. 250
B. 750
C. 1,200
D. 2,500
E. 4,000
ANSWER: C

An appraisal of a freestanding store and the land it occupies is an unbiased

estimate of the value of an interest in ________.
A. personal property
B. mortgages
C. real estate
D. personal property and land
E. real estate plus business value
ANSWER: C

The term vertical interest does NOT refer to rights to ________.

A. subsurface mineral extraction
B. the construction and railroad tunnels
C. the use and regulation of air space
D. subdivision and development
E. the construction of buildings over railroad yards
ANSWER: D

Inflation tends to increase the value of ________.

A. fixed-income securities
B. mortgages
C. deeds in lieu of foreclosure
D. tangible long-lived investments
E. debts
ANSWER: D

With an amortized mortgage loan,________.

A. interest only is paid until maturity
B. some principal is repaid with each payment
C. the entire principal is repaid before maturity
D. equal amounts of principal are repaid each period
E. there is a balloon payment at maturity
ANSWER: B

When each alternative use requires the same capital investment, the use that
maximizes the investment�s ____ on a long-term basis is highest and best use.
A. diversified portfolio
B. operating expenses
C. net operating income
D. potential gross income
E. occupancy rate
ANSWER: C

The basic formula of property valuation via income capitalization is ________.

A. V=IR
B. V=I/R
C. V=R/I
D. V=SP/GR
E. V=I/F
ANSWER: C

A land speculator expects that a certain 100-acre tract can be sold to a subdivider
4 years from now for 10,000 per acre. If holding and selling costs are disregarded,
what cash price today (rounded to the nearest 1,000) would allow the speculator to
realize a 15% compounded annual rate of return on the entire tract?
A. 572,000
B. 5,000
C. 600,000
D. 6,000
E. none of the above
ANSWER: A

Gross income multipliers are generally considered part of ________.

A. the cost approach
B. the direct sales comparison approach
C. the income capitalization approach
D. the insurance approach
E. none of the above
ANSWER: B

Use of a gross rent multiplier is valid when the subject and comparable properties
have similar ________.
A. potential gross
B. effective gross incomes
C. net operating incomes
D. operating expense ratios
E. cash flows
ANSWER: D

Time-distance relationship between a site and all relevant origins and destinations
are called ________.
A. access roads
B. transit facilities
C. ingress and egress
D. linkages
E. synergies
ANSWER: D

The land on which a 10-year-old house is located is valued at P28,000, and the
reproduction cost of the dwelling is P92,000. Straight-line apreciation is 2% per
year, applied to the building only. If there is no other obsolescence, what is the
indicated value of the property?
A. P96,000
B. P101,600
C. P117,000
D. P117,700
E. P120,000
ANSWER: B

Effective gross income is income after an allowance for ________.

A. depreciation
B. operating expenses
C. cash expenditures
D. both A and B
E. none of the above
ANSWER: E

All of the following lease provisions are advantageous to the lessee EXCEPT
________.
A. an escape clause
B. a renewal option
C. a purchase option
D. an escalation clause
E. none of the above
ANSWER: B

To earn 12% annual cash return on a cash investment, what should you pay for a
property that earns 4,000 per month and has operating expenses of 1,250 per month?
A. 150,000
B. 275,000
C. 229,166
D. 333,333
E. 400,000
ANSWER: A

In selecting an overall capitalization rate for an income-producing property, the

appraiser will consider all of the following EXCEPT ________.
A. return on invested capital
B. risk factors
C. return of invested capital
D. the interest rate on the existing loan, which was arranged last year
E. the interest rate prevailing in the market
ANSWER: D

A 200-unit apartment complex includes 80 one-bedroom units that rent for 475 and
120 two-bedroom units that rent for 575 monthly. The vacancy rate is 5%;
miscellaneous income is 5,000 annually. Operating expenses amount to 400,000. The
mortgage loan requires annual payments of 630,000. The potential gross income is
______?
A. 1,289,000
B. 1,284,000
C. 112,000
D. 107,000
E. none of the above
ANSWER: B

A 200-unit apartment complex includes 80 one-bedroom units that rent for 475 and
120 two-bedroom units that rent for 575 monthly. The vacancy rate is 5%;
miscellaneous income is 5,000 annually. Operating expenses amount to 400,000. The
mortgage loan requires annual payments of 630,000. The Effective gross income is
______.
A. 1,224,800
B. 1,220,000
C. 824,800
D. P107,000
E. none of the above
ANSWER: A

A 200-unit apartment complex includes 80 one-bedroom units that rent for 475 and
120 two-bedroom units that rent for 575 monthly. The vacancy rate is 5%;
miscellaneous income is 5,000 annually. Operating expenses amount to 400,000. The
mortgage loan requires annual payments of 630,000. The net operating income is
_________.
A. 1,224,800
B. 1,220,000
C. 824,800
D. 424,800
E. none of the above
ANSWER: C

A 200-unit apartment complex includes 80 one-bedroom units that rent for 475 and
120 two-bedroom units that rent for 575 monthly. The vacancy rate is 5%;
miscellaneous income is 5,000 annually. Operating expenses amount to 400,000. The
mortgage loan requires annual payments of 630,000. Before-tax cash flow is
A. 1,030,000
B. 824,800
C. 424,800
D. 194,800
E. none of the above
ANSWER: D

To obtain the present value of a series of incomes, a (n) ____ rate is applied.
A. discount
B. income
C. overall capitalization
D. equity capitalization
E. stated
ANSWER: E

A fast-food chain could buy the building and land necessary for a new outlet for
200,000. Instead, an investor bought the property for this amount and lease it for
2,000 per month over a 20-year term. Rent is payable at the end of each month. What
yield to maturity is implied by the lease, assuming that, at the end of 20 years,
the property is still worth about P200,000?
A. 8%
B. 10%
C. 12%
D. 14%
E. 15%
ANSWER: C

When market rent is less than contract rent, the difference is known as ________.
A. overage rent
B. excess rent
C. percentage rent
D. gross rent
E. slippage rent
ANSWER: B

If a particular buyer requires as recapture of the building portion of the purchase

price in 25 years, what is the indicated recapture rate for the building, assuming
straight-line recapture?
A. 0.25%
B. 2%
C. 4%
D. 20%
E. 25%
ANSWER: C

In a high-rise, 100-unit apartment building there is a basement laundry area that

brings in 100 monthly from the concessionaire. The laundry income is ________.
A. included, as miscellaneous income, in potential gross income
B. included, as other income, in effective gross income
C. deducted from effective gross income
D. added to before-tax cash flow
E. distributed to the maintenance workers
ANSWER: B

The appraiser final estimate should be based on ________.

A. average of three value indications obtained by three approaches
B. weighing of the reliability of the information analyzed in each of the three
approaches
C. the most sophisticated guess technique
D. adjustment for most recent indicators in the local market
ANSWER: B

The appropriate time adjustment is concluded to be an increase of 7% per year

compounded. The time adjustment for a comparable sales property that should for
80,000.00 two years ago.
A. 11,529
B. 9,200
C. 5,600
D. 11,200
E. 91,592
ANSWER: E

The criteria for determining the highest and best used include all of the following
EXCEPT ________.
A. physical possibility
B. financial feasibility
C. legal permissibility
D. probable use
E. effect on community welfare
ANSWER: E

The broad forces affecting value do not include ________.

A. physical
B. life cycle
C. political
D. social
E. economic
ANSWER: B

In one step of the land value residual technique, the building capitalization rate
is applied to the known building value to estimate the ________.
A. highest and best use of the site
B. cost of the building
C. income needed to support the land
D. net operating income needed to support the building
E. land value
ANSWER: D