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Residential Sales Comparison and Income Approaches > Chapter 12 Six Functions of a Dollar > Flashcards

Chapter 12 Six Functions of a Dollar Flashcards

1
Q

The six related compound interest functions used in the mathematics of finance and shown in standard compound interest tables.

A

The six functions of a dollar

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2
Q

The six functions of a dollar are:

A

· Amount of $1 (The amount to which $1 will grow)

· Amount of $1 Per Period (The amount to which $1 per period will grow)

· Sinking Fund Factor (The amount per period which will grow to $1)

· Present Value of $1 (What $1 due in the future is worth today)

· Present Value of $1 per period (What $1 payable periodically is worth today)

· Partial Payment (Amount to amortize $1)

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3
Q

contract providing for regular payments of predictable amounts. Regular payments are those that occur at a constant periodic rate, such as monthly, quarterly, or annually. Predictable amounts include those that are level, that escalate based on the Consumer Price Index, that step up, or that can be predicted in any other way

A

annuity

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4
Q 
What is the future value of $20,000 if you deposited it today in a savings account paying 9% interest per year, and left it, without making any other deposits, for 12 years?
$48,891.32
$53,266.54
$56,253.30
$64,567.89
A

$56,253.30

-refer to 9% table column 1

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5
Q 
Compounding is used to solve for \_\_\_\_\_\_\_\_\_\_\_ values, whereas discounting solves for \_\_\_\_\_\_\_\_\_\_\_ values.
Present, future
Future, present
Future, concurrent
Present, past
A

future, present

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6
Q 
In the Six Functions of a Dollar table, column \_\_\_ is also called the annuity column.
1
2
4
5
A

2

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7
Q 
What is the sinking fund factor amount if you planned to replace the roof of your investment property (at a cost of $7,500) in 20 years and you expected the funds to grow at the rate of 9% per year?
$146.60
$187.90
$198.27
$222,89
A

$146.60

column 3

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8
Q 
At a 9% annual “discount” rate, what is the present worth of $20,000 if you will not receive it for another 13 years?
$5,555.62
$6,282.90
$6,523.58
$10,420.62
A

$6,523.58

column 4

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9
Q 
At a 9% annual “discount” rate, what is the present worth of a 20 year mortgage note that gives you annual payments of $3,500?
$18,302.84
$23,591.26
$28,816.90
$31,949.91
A

$31,949.91

column 5??

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10
Q 
What is the annual mortgage payment necessary to amortize a $185,000 mortgage for 25 years at 9% interest?
$18,834.11
$19,256.98
$21,374.80
$24,396.11
A

$18,834.11

column 6, mortgage cap rate

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11
Q 
"The continuous and systematic additions to a principal sum over a series of successive time periods so that previously earned interest earns interest" is the definition of
Investment value
Compound interest
Simple interest
Interest per period
A

compound interest

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12
Q 
In the Six Functions of a Dollar table, column \_\_\_ is also called the Annuity Column.
1
2
4
5
A

2

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13
Q 
Compounding and discounting are \_\_\_\_\_\_\_\_\_\_\_.
Opposites
Equal
Complementary
Not related
A

opposites

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14
Q 
In the Six Functions of a Dollar table, column \_\_\_ is the Sinking Fund Factor Column.
1
2
3
4
A

3

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15
Q 
A Mortgage Capitalization Rate is also called a
Mortgage Ratio
Mortgage Constant
Equity Dividend Rate
Reversion Rate
A

mortgage constant

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16
Q 
In the Six Functions of a Dollar table, which columns solve for present values?
1, 2, 5
2, 4, 6
1, 2, 3
4, 5, 6
A

4, 5, 6

1, 2, 3 future values

17
Q 
What is the sinking fund factor amount if you planned to replace the boiler of your investment property (at a cost of $30,000) in 12 years and you expected the funds to grow at the rate of 9% per year?
$1,489.53
$1,532.44
$1,690.24
$1,764.56
A

$1,489.53

18
Q 
Compounding and discounting are \_\_\_\_\_\_\_\_\_\_\_.
Opposites
Equal
Complementary
Not related
A

Opposites

19
Q 
At a 9% annual “discount” rate, what is the present worth of a 20 year mortgage note that gives you annual payments of $7,500?
$63,177.90
$68,464.10
$71,546.89
$78,102,34
A

$68,464.10

20
Q 
What is the sinking fund factor amount if you planned to replace the roof of your investment property (at a cost of $4,500) in 15 years and you expected the funds to grow at the rate of 9% per year?
$153.27
$187.90
$198.27
$222,89
A

$153.27

21
Q 
A Mortgage Capitalization Rate is also called a
Mortgage Ratio
Mortgage Constant
Equity Dividend Rate
Reversion Rate
A

mortgage constant

22
Q 
In the Six Functions of a Dollar table, which columns solve for present values?
1, 2, 5
2, 4, 6
1, 2, 3
4, 5, 6
A

4, 5 , 6

23
Q 
What is the annual mortgage payment necessary to amortize a $185,000 mortgage for 25 years at 9% interest?
$18,834.11
$19,256.98
$21,374.80
$24,396.11
A

$18,834.11

column 6

Residential Sales Comparison and Income Approaches (19 decks)

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