Fin 590 Week 8 Final Exam Answers

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FIN 590 Week 8 Final Exam Answers Follow Below Link to Download Tutorial For More Information Visit Our Website ( ) Email us At: or Question 1. 1. (TCOs B, C) The difference between the rate of return on assets and the cost of borrowing is: (Points : 5) financial leverage spread debt service none of the above Question 2. 2. (TCO A) The investment decision process: (Points : 5) is fundamentally the same for real estate investment analysis as for other investment areas requires the investor to adjust expected cash flows for timing differences and risk …show more content…

What is its effective gross income? (Points : 5) $1,455,000 $1,464,000 $698,250 none of the above Page 2 (of 3) Question 1. 1. (TCO A) If investors agree on the amount, timing, and certainty of after-tax cash flows associated with an investment proposition, and if they have the same opportunity cost of capital, would they generally place the same investment value on the property? Explain your answer. (Points : 20) Question 2. 2. (TCOs A, B, C) Based on the following data, estimate net operating income. Show your work in good form. Two-bedroom units rent for $600 per month (total of 40 units) One-bedroom units rent for $450 per month (total of 20 units) Vacancy and uncollectible rent losses typically amount to six percent of potential gross rent. Operating expenses average approximately 45 percent of potential gross income. (Points : 30) Question 3. 3. (TCOs C, D) A taxpayer paid $500,000 for a small industrial property (80 percent of the value is properly attributable to the building, the balance to the land) and incurred transaction costs that equaled five percent of the purchase price. During her 18th month of ownership, she sold the property for $550,000 and paid transaction costs equal to eight percent of the sales price. Compute the gain or loss on the sale. (Points : 20) Question 4. 4. (TCOs C, D) How does an installment sales contract (land contract) (a) resemble a

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