Chapter 3

Question 1

What is the conversion of income into value?

Answer 1

Capitalization

Question 2

What is pre tax Cash flow? (PTCF)
Pg. 46

Answer 2

The portion of NOI that remains after total mortgage debt service is paid but before income tax on operation is deducted.

Question 3

When subtracting operating expenses, it is applied as a percent of the _______?

Answer 3

EGI (effective gross income)

Question 4

What are the 2 types of operating expenses?

Answer 4

Fixed and variable

Question 5

Fixed expenses are paid ____________.

Answer 5

Whether the property is rented or not.

Question 6

How are variable expenses are paid?

Answer 6

Based on the variance of the occupancy

Question 7

Define NOI

Answer 7

The actual or anticipated net income that remains after all operating expenses are deducted from EGI, but BEFORE mortgage debt service and book depreciation are deducted.

Question 8

Operating expense ratio (OER)

Answer 8

OER= 1- NIR
(net income ratio)

Question 9

NIR (net income ratio)

Answer 9

NIR= 1 - OER

Question 10

NIR and OER are percentages of?

Answer 10

EGI (effective gross income)