Question 1 A landlord can shift risk to tenants through the use of:
(A) tax stops
(B) escalator clauses
(C) net leases
(D) all of the above
Question 2 In real estate investment analysis, capitalization rates:
(A) are a measure of the relationship between a property's market value and net operating income
(B) are used primarily as an income forecasting tool
(C) are a measure of the relationship between a property's market value and gross rental income
(D) none of the above are true
Question 3. Depreciation allowances affect:
(A) income tax consequences
(B) net operating income
(C) before-tax cash flow
(D) all of the above
Question 4. A real estate investment is available at an initial cash outlay of $10,000 and is expected to yield cash flows of $3,343.81 per year for five years. The internal rate of return is approximately:
(A) 2%
(B) 20%
(C) 23%
(D) 17%
Question 5. The revenue a property is expected to generate after adjusting for operating expenses but before providing for debt service or income tax consequences is:
(A) net operating income
(B) effective gross income
(C) normalized gross income
(D) before-tax cash flow