Session 13 Quiz

Question 1

It is a guideline method that utilises information on transactions involving assets that are the same to the subject asset to arrive at an indication of value

Answer 1

Comparable Transactions Method

Question 2

In an appraisal of a property using the three approaches to value, each approach resulted in a different value indication. The indicated value by the cost approach was Php100,000, the indicated value by the sales comparison approach was Php93,500, and the indicated value by the income capitalization approach was Php95,000. Are you forced to choose one of these value indications?

Answer 2

No, you can choose any one of the numbers or any number between and, in some cases, slightly above or below the range.

Question 3

A commercial property producing an annual gross income of P390,000 was sold two months ago for P3,412,500. What is the property’s gross income multiplier?

Answer 3

8.75

GIM = 3,412,500 / 390,000 = 8.75

Question 4

The added value inherent in the combine common ownership of the two or more contiguous lots.

Answer 4

Plottage value

Question 5

A residence has been listed for sale in the MLS for the last six months at a price of Php124,900, and it has not sold. In this market, the average marketing period is 45 days for this type of property.

Answer 5

The subject property’s market value could be lower than the list price

Question 6

A commercial property producing a monthly income of P50,000 was sold for P10,285,500. What is the property’s gross income multiplier?

Answer 6

17.14

Annual Gross = 50000 per mo x 12 mo = 600 000
GIM = 10285500 / 600,000 = 17.14

Question 7

Formula for Yield Capitalization Method

Answer 7

Value = NOI / Capitalization Rate

Question 8

A coal mine products about Php100,000 a year in net income. The consulting geologist indicated that the mine will produce that amount of one each year for 11 more years. At the end of the mining operation, the land will have be value except as a landfill. The value for that use should be about Php100,000. Investors in this type of property require a yield of 9% on the investment. What is the value of the coal mine?

Answer 8

Php700,000

Question 9

If the three approaches to value provide three different value indications, the appraiser should

Answer 9

Choose a value opinion that best represents the market for the subject based on all data available as of the date of the appraisal

Question 10

It means that the market value of a real estate is greatest as it is nearer the road, and reduces in market value as it is farther away from it

Answer 10

Stripping Method

Question 11

The ____________ of appraising land is a technique of appraising land in which the appraiser collects information about the site values of comparable sales and establishes a ratio between the site value and the total value.

Answer 11

Allocation Method

Question 12

A property was purchased for Php1,250,000. The net operating income (NOI) is Php100,000. Both NOI and value are expected to increase at a compound rate of 1% per year. What yield will be achieved if the property is held for 10 years?

Answer 12

9%

Question 13

If a property has a net income ratio of .55 and a gross income multiplier of 12, what is the indicated overall capitalization rate?

Answer 13

4.58%

Cap rate = GIM / NOI rate = .55/12 = 4.58 percent

Question 14

A property was valued at P124,000 based on an annual direct capitalization rate of 13%. What is the property’s annual income?

Answer 14

P16,120

Question 15

In order to buy a commercial building, it requires an equity investment of Php 20,000,000.00. Annual cash flow is expected to be Php 2,000,000.00. Compute the payback period.

Answer 15

10 years

PP = Investment / Annual Yield = 20M / 2M = 10 years

Question 16

An individual wants to receive P1,500 annually at the end of each year for the next 10 years. If the annual interest rate is 5%, what is the present value of this annuity?

Answer 16

P11,582.60

Question 17

A 20-hectare lot with different owners fronting highway (rawland). What is the value/sqm. of the 2nd, strip if the first strip fronting highway is valued at P500.00/sqm.

Answer 17

P375/ sqm

Question 18

A property has 25 apartment units, 15 units two bedroom unit renting for P5,000.00 per month each and 10 one bedroom unit renting for P2,000.00 per month east. There are 14 two bedroom units occupied and 8 one bedroom units occupied. The potential gross income yearly is:

Answer 18

P1,140,000.00

Question 19

What is the yield on the purchase of a leasehold position paying Php25,000 per year for the next 25 years with payments at the end of the period if the purchase price is Php175,3000? (Round to the nearest full percentage point)

Answer 19

14%

Question 20

What is the vacancy rate of rental apartments of a community with 50 empty rental apartments and 500 total rental apartments?

Answer 20

10%