Filters
Question type
Study Flashcards

Which of the following costs should NOT be included in a net present value analysis of a land development project?


A) Land purchase price
B) Property tax
C) General overhead such as personnel costs
D) Developer's profit

Correct Answer

verifed

verified

Each parcel of land in a new development is selling for $15,000 and the total project revenue is estimated to be $5,000,000.The project lender has stated that the loan should be paid off when 80% of the total project revenue has been earned.The total loan amount is $3,500,000.What is the release price for each parcel?


A) $8,400
B) $13,215
C) $18,750
D) None of the above

Correct Answer

verifed

verified

In order to obtain a land development loan,the developer is required usually to purchase title insurance

Correct Answer

verifed

verified

Which of the following is FALSE regarding the release price?


A) It is usually calculated to pay off the loan when the last lot is sold
B) It is usually calculated to pay off the loan before the last lot is sold
C) Increasing the release price usually lowers the lender's risk
D) Increasing the release price is likely to lower the investor's initial cash flow

Correct Answer

verifed

verified

The release price is the dollar amount of a loan that must be repaid when a lot is sold

Correct Answer

verifed

verified

It is illegal for the lender to hold back funds from the developer It is illegal for the lender to hold back funds from the developer

Correct Answer

verifed

verified

Refer to the information in the previous question.You have been advised that sales revenues may be 10 percent lower and/or development costs may be 10 percent higher.Performing a sensitivity analysis,you conclude:


A) A 10 percent decrease in sales revenues would have a bigger impact on returns than a 10 percent increase in development costs
B) A 10 percent increase in development costs would have a bigger impact on returns than a 10 percent decrease in sales revenues
C) A 10 percent increase in development costs and a 10 percent decrease in sales revenues would have opposite impacts on returns,canceling each other out and having no impact on returns
D) Both factors would have such a small impact,that there is no reason to be concerned about either a 10 percent increase in development costs or a 10 percent decrease in sales revenues
Refer to the information in the previous question.You have been advised that sales revenues may be 10 percent lower and/or development costs may be 10 percent higher.Performing a sensitivity analysis,you conclude: A) A 10 percent decrease in sales revenues would have a bigger impact on returns than a 10 percent increase in development costs B) A 10 percent increase in development costs would have a bigger impact on returns than a 10 percent decrease in sales revenues C) A 10 percent increase in development costs and a 10 percent decrease in sales revenues would have opposite impacts on returns,canceling each other out and having no impact on returns D) Both factors would have such a small impact,that there is no reason to be concerned about either a 10 percent increase in development costs or a 10 percent decrease in sales revenues

Correct Answer

verifed

verified

It is proper to include an estimate for developer profit as a cost of development when projecting net cash flows and evaluating whether a required rate of return will be met

Correct Answer

verifed

verified

The release schedule refers to a schedule of expiring leases for existing tenants

Correct Answer

verifed

verified

When financing land development,the lender generally requires the developer to submit which of the following?


A) A detailed breakdown of project cost
B) Required zoning changes
C) Bank references for the general contractor to be used on the project
D) All of the above

Correct Answer

verifed

verified

It is common for a developer to hold back funds to be sure that subcontractors perform all work completely before making final payment

Correct Answer

verifed

verified

Showing 21 - 31 of 31

Related Exams

Exam 1

Real Estate Investment: Legal Concepts

22 Questions

Exam 2

Basic Real Estate Financing: Notes and Mortgages

41 Questions

Exam 3

Mortgage Law Foundation: The Time Value of Money Part Two Financing Residential Properties

24 Questions

Exam 4

Fixed Rate Mortgage Loans

33 Questions

Exam 5

Adjustable and Floating Rate Mortgage Loans

27 Questions

Exam 6

Mortgages: Additional Concepts, Analysis, and Applications

31 Questions

Exam 7

Single Family Housing: Pricing, Investment, and Tax Considerations

32 Questions

Exam 8

Underwriting and Financing Residential Properties

33 Questions

Exam 9

Income-Producing Properties: Leases, Rents, and the Market for Space

36 Questions

Exam 10

Valuation of Income Properties: Appraisal and the Market for Capital

42 Questions

Exam 11

Investment Analysis and Taxation of Income Properties

36 Questions

Exam 12

Financial Leverage and Financing Alternatives

33 Questions

Exam 13

Risk Analysis

27 Questions

Exam 14

Disposition and Renovation of Income Properties

34 Questions

Exam 15

Financing Corporate Real Estate Part Four Financing Proposed Projects

29 Questions

Exam 16

Financing Project Development

32 Questions

Exam 18

Structuring Real Estate Investments: Organizational Forms and Joint Ventures

27 Questions

Exam 19

The Secondary Mortgage Market: Pass-Through Securities

34 Questions

Exam 20

The Secondary Mortgage Market: Cmos and Derivative Securities

37 Questions

Exam 21

Real Estate Investment Trusts Reits

34 Questions

Exam 22

Real Estate Investment Performance and Portfolio Considerations Index

30 Questions

Show Answer