Week 4 Quiz

Question 1

What is the most important aspect regarding how the IRR is calculated?

Answer 1

Timing
Cash Flows
Negative First Year Cash Flow
(all the above)

Question 2

We look at Unlevered Returns to make sure the property has good fundamentals without leverage. True or False?

Answer 2

True

Question 3

What two things does the Cash-on-Cash Return compare?

Answer 3

Annual Cash Flows
Negative Cash Flows

Question 4

What two things does the Equity Multiple compare?

Answer 4

Total negative Cash Flow
Total Positive Cash Flow

Question 5

How do you calculate the terminal value of your property?

Answer 5

The NOI of your terminal year divided by your exit cap rate

Question 6

Which of the following items would not be included in the Year 0 value?

Answer 6

Debt origination

Question 7

True or False: Sources do not need to equal the uses.

Answer 7

False

Question 8

What SHOULD be included in Year 0 value?

Answer 8

Purchase price
closing costs