Q&A Hero

Q: The potentially large amount of taxes due on sale of commercial property has caused investors and policy makers to seek ways to defer taxes on the disposition of a property. A popular option has become for investors to swap one eligible property for another in order to avoid or defer capital gains taxes. Which of the following methods for deferring taxes does this describe? A. Installment sale B. Fully-taxable sale C. Like-kind exchange D. Sale leaseback

Q: Which of the following is incorrect with regard to destination contracts? A.The seller is responsible for shipping the goods. B.The seller is liable for any damages incurred to the good during shipment. C.The buyer is liable for any damages incurred to the good during shipment. D.The buyer specifies where the seller is to ship the goods.

Q: Current tax law allows investors to take tax credits for the cost of renovating or rehabilitating older or historic structures and for the construction or rehabilitation of qualified low-income housing. Which of the following statements regarding tax credits is true? A. A $1 tax credit reduces the investor's tax liability by an amount dependent on the individual's income tax bracket. B. A $1 tax credit reduces the investor's tax liability by $1. C. A $1 tax credit increases the investor's taxable income by $1 D. A $1 tax credit has exactly the same impact on an investor's tax liability as a tax deduction.

Q: If a party fails to perform a portion of a contract deemed important and necessary to the contract but otherwise performs as specified: A.The contract will be considered completely performed. B.The contract will be considered substantially performed. C.The contract will be considered materially breached. D.The contract performance will be considered to have been tendered

Q: Congressional legislation has repeatedly altered the period of time over which rental real estate may be depreciated. Currently, residential income producing property (e.g. apartments) may be depreciated over no less than: A. 3 years B. 7 years C. 15 years D. 27 years

Q: Jessica hires Bob's builders to construct a house for her. The contract specifies that grade A+ shag carpeting is to be installed on the entire second floor. Bob's accidentally installs grade A shag carpeting instead. Few people except for carpeting experts can tell the difference. A.This would likely be considered complete performance and Jessica can do nothing because this is a extremely minor breach. B.Jessica may claim a breach of contract and refuse to pay for the house. C.This would likely be considered substantial performance and Jessica would be entitled to monetary damages. D.None of the above.

Q: The value of a property can be thought of as having two components, a land component and a building component. Since the land component of the original cost basis is not depreciable, it is important to understand how much of the property's value is typically attributed to the land for tax purposes. As a general rule, the value of land constitutes what percentage (expressed as a range) of the total value of a commercial property? A. 0% to 10% B. 10% to 30% C. 30% to 50% D. 50% to 70%

Q: Frank signs a contract to purchase a car from Jessie for $200. The next day he calls and asks if Jessie will throw in the fuzzy dice hanging from the rear view mirror and Jessie agrees. Is the agreement for the inclusion of the fuzzy dice enforceable? A.Yes, under the parole evidence rule. B.No, under the parole evidence rule. C.Yes, because the fuzzy dice don't add $500 it the contract. D.No because once a contract is reduced to writing, it can't be modified or changed under any circumstances.

Q: Certain costs associated with a property's upkeep as well as the manner in which it was financed can be depreciated and therefore have a beneficial impact on the tax paid by the investor in a particular year. Which of the following cash outflows is deductible for income tax purposes in the year in which they are made? A. Operating expenses B. Capital expenditures C. Up-front financing costs D. Repayment of principal

Q: If a contract contains a condition subsequent it means that: A.Performance will be due upon the happening of some specified future event. B.Performance will be excused upon the happening of some specified future event. C.Performance must be completely done according to contract specifications or the contract is breached. D.Impossibility of performance will not be an acceptable excuse for nonperformance.

Q: Since many commercial properties are held by limited liability corporations or limited partnerships, it is important to understand the tax consequences at the individual investor level. Individuals face different tax rates depending on the level of their taxable income. As of 2012, an individual making between $$85,650 and $178,650 would fall into which of the following tax brackets? A. 15% B. 25% C. 28% D. 35%

Q: If performance of a party to a contract only slightly deviates from contract requirements, this will be considered: A.Complete performance. B.Substantial performance. C.Breach of contract. D.Waiver of performance.

Q: When an investment appreciates in value during the investment holding period, the appreciation is generally taxed at which of the following rates? A. Ordinary tax rates B. Capital gain tax rates C. Portfolio income tax rates D. Active income tax rates

Q: An offer to perform one's required duties under a contract is called: A.Conditional performance. B.Qualified performance. C.Substantial performance. D.Tender of performance.

Q: When cash flows are classified as passive activity income, investors are subject to passive activity loss restrictions. These restrictions imply that passive income losses: A. can be used to offset positive taxable income from other passive activities. B. can be used to offset positive taxable income from other passive and active activities. C. can be used to offset positive taxable income from other passive and portfolio activities. D. cannot be used to offset positive taxable income from any type of activity.

Q: Two corporations negotiate and enter into a written agreement. The parol evidence rule will bar: A.Oral evidence presented to prove that a fraud occurred when the contract was formed. B.Oral evidence presented to prove the existence of an oral agreement made at the time that the contract was negotiated and signed. C.Oral evidence presented to prove the existence of an oral agreement made after the contract was negotiated and signed. D.Oral evidence presented to explain an ambiguous term in the contract.

Q: There are three main types of income subject to federal taxation. Which of the following types of income includes income generated from rental real estate investments? A. Active income B. Portfolio income C. Passive activity income D. Residual income

Q: Sally goes to Honest Harry's used car lot to purchase a car. After test driving the car, she sits down to negotiate the contract. She asks about a warranty and Harry says that all cars that he sells come with a 30 day unconditional warranty on all parts and labor. She signs the contract and the next day the engine blows a rod. When she calls Harry she's told that there is no warranty according to the contract. She reads her contract and it says "as is". A.Sally may introduce evidence of Harry's promise using the statute of frauds. B.Sally may introduce evidence of the contract using the parol evidence rule. C.Sally will be barred from introducing evidence of the contract based on the statute of frauds. D.Sally will be barred from introducing evidence of the contract based on the parol evidence rule.

Q: Distinguishing between the four categories of real estate for federal tax purposes can be misleading at times. Which of the following categories includes properties that are held primarily for capital appreciation? A. Personal residence B. Dealer property C. Trade or business property D. Investment property

Q: Suppose a taxpayer owns an apartment complex. Under U.S. tax law, in what category would this property be classified? A. Personal residence B. Dealer property C. Trade or business property D. Investment property

Q: When a party intentionally relinquishes a right to enforce a contract, this is called a: A.Let loose agreement. B.Waiver. C.Emancipation agreement. D.Surrender.

Q: For purposes of federal income taxes, real property is classified into four categories. With which of the following types of real estate is the investor able to reduce his taxable income to reflect the wear and tear of a property over time? A. Personal residence B. Dealer property C. Trade or business property D. Investment property

Q: Regarding the statute of frauds: A.Oral contracts that fall under the statute are voidable. B.A hand written agreement in pencil on loose leaf paper is acceptable. C.It covers contracts that contain ambiguous statements. D.All of the above.

Q: Greatyear Tires orders 50 tons of rubber from a Bill, a rubber broker. The broker has a number of rubber plantations that it can deal with but does almost all of its business with Ritchie's Rubber Farm. The delivery of the rubber is due on September 1st. On August 1st, a fire destroys Ritchie's Rubber Farm. A.Bill's performance is excused due to impossibility of performance. B.Bill's performance is excused due to commercial impracticality. C.Bill's performance is excused if he can show that dealing with another plantation will be extremely difficult and very inconvenient. D.Bill's performance will not be excused if he can get the rubber from another source even if a higher cost cuts his profit margin.

Q: Under certain circumstances, investors are permitted to reduce the amount of the taxable income that they report by an amount that is intended to reflect the wear and tear of an asset over time. This is commonly referred to as: A. appreciation B. depreciation C. capital gains D. capital losses

Q: U.S. tax law is designed to raise revenues for the operations of the federal government and to promote certain socially desirable real estate-related activities. Tax legislation is combined into a single section of the federal statutory law commonly referred to as: A. Section 1231 B. Section 1031 C. the Internal Revenue Code D. Tax Reform Act

Q: Jones Corp. has ordered 50 computers from Smith Computers Inc. The computer specifications, colors and price are each clearly specified in the contract, however the delivery date and place of delivery are not mentioned. A.This contact will be unenforceable because it is too vague. B.Because of the missing terms, performance will be excused due to commercial impracticality. C.Because of the missing terms, performance will be excused due to impossibility of performance. D.The courts can use UCC gap fillers to fill in the missing terms.

Q: The direct ownership of commercial real estate produces cash flows from rental operations and, perhaps, cash flow from an eventual sale of the property. Since financial leverage and tax considerations play an important part in determining an investor's returns, the measure of investment value most relevant to investors is the present value of: A. before-tax cash flows (BTCF) B. after-tax cash flows (ATCF) C. net operating income (NOI) D. net sale proceeds (NSP)

Q: If a contract contains a condition precedent it means that: A.Performance will be due upon the happening of some specified future event. B.Performance will be excused upon the happening of some specified future event. C.Performance must be completely done according to contract specifications or the contract is breached. D.Impossibility of performance will not be an acceptable excuse for nonperformance.

Q: That oral evidence may not alter a written contract: A.Has to do with tender of performance. B.Has to do with the parol evidence rule. C.Has to do with the statute of frauds. D.Has to do with the substantial performance.

Q: Given the following information regarding an income producing property, determine the after tax internal rate of return (IRR). Expected Holding Period: 5 years; 1st year Expected BTCF: $30,656; 2nd year Expected BTCF: $33,329; 3rd year Expected BTCF: $36,082; 4th year Expected BTCF: $38,918; 5th year Expected BTCF: $41,839; 1st year Expected Tax Liability: $7,645; 2nd year Expected Tax Liability: $8,658; 3rd year Expected Tax Liability: $9,708; 4th year Expected Tax Liability: $10,798; 5th year Expected Tax Liability: $6,951; Estimated Before Tax Equity Reversion at end of year 5: $343,674; Expected Taxes Due on Sale at end of year 5: $32,032; Required equity investment: $241,163A. 11.2%B. 13.3%C. 15.4%D. 20.3%

Q: The parole evidence rule will permit oral testimony to explain which of the following contract terms? A.12 dozen sweaters were ordered. B.The cost will be $10.00 per sweater. C.All 12 dozen sweaters are to be blue. D.Delivery is to be made at the buyer's place of business on August 8, 2009.

Q: The following contract must be in writing to be enforceable: A.A $499.00 loan where the debtor is using the money to buy land B.An agreement to buy a car for $499.00 within 9 months C.A 24 month loan agreement for $50,000 D.An agreement to be collaterally liable on a loan for a friend.

Q: Given the following information regarding an income producing property, determine the internal rate of return (IRR) using levered cash flows. Expected Holding Period: 5 years; 1st year Expected NOI: $89,100; 2nd year Expected NOI: $91,773; 3rd year Expected NOI: $94,526; 4th year Expected NOI: $97,362; 5th year Expected NOI: $100,283; Debt Service in each of the next five years: $58,444; Current Market Value: $885,000; Required equity investment: $221,250; Net Sale Proceeds of Property at end of year 5: $974,700; Remaining Mortgage Balance at end of year 5: $631,026. A. 10.6% B. 12.2% C. 22.9% D. 33.4%

Q: The parol evidence rule: A.Allows the use of oral testimony to clear up ambiguous parts of a written contract B.Determines when a convict will be let out of jail C.Says that certain contracts must be in writing D.Prohibits the use of oral testimony with regard to a written contract for any purpose

Q: Given the following information regarding an income producing property, determine the unlevered internal rate of return (IRR). Expected Holding Period: 5 years; 1st year Expected NOI: $89,100; 2nd year Expected NOI: $91,773; 3rd year Expected NOI: $94,526; 4th year Expected NOI: $97,362; 5th year Expected NOI: $100,283; Debt Service in each of the next five years: $58,444; Current Market Value: $885,000; Required equity investment: $221,250; Net Sale Proceeds of Property at end of year 5: $974,700; Remaining Mortgage Balance at end of year 5: $631,026. A. 10.6% B. 12.2% C. 22.9% D. 33.4%

Q: The UCC writing requirements govern: A.Car rentals. B.The sale of a new car. C.Hiring maids to clean your house. D.All of the above.

Q: Given the following information regarding an income producing property, determine the NPV using levered cash flows in your analysis. Required equity investment: $270,000; Expected NOI for each of the next five years: $150,000; Debt Service for each of the next five years: $125,000; Expected Holding Period: 5 years; Required yield on levered cash flows: 15%; Expected Sale Price at end of Year 5: $2,000,000; Expected Cost of Sale: $125,000; Expected Mortgage Balance at time of sale: $1,500,000 A. $245.15 B. $270,245.15 C. $419,264.54 D. $1,435,029.64

Q: That parties to a written contract may not introduce oral evidence to change written terms is an application of: A.The statute of frauds. B.Concurrent conditions. C.The parole evidence rule. D.Conditions subsequent.

Q: Given the following expected cash flow stream, determine the NPV of the proposed investment in an income producing property and determine whether or not the investment should be pursued. Investment Horizon: 5 years; Expected Yearly Cash Flow in each of the next five years: $127,628. Expected Sale Price at end of 5 years: $1,595,350; Opportunity Cost of Investment 6%; Current Market Price of Property: $1,750,000 A. NPV is -$20,246; Decision is to invest B. NPV is -$20,246; Decision is not to invest C. NPV is $249,967; Decision is to invest D. NPV is $249,967; Decision is to not invest

Q: A client has requested advice on a potential investment opportunity involving an income producing property. She would like you to determine the internal rate of return of the investment opportunity based on the following information. Expected Holding Period: 5 years; End of first year NOI estimate: $113,900; NOI estimates in subsequent years will grow by 5% per year; Price at which the property is expected to be sold at the end of year 5: $1,615,205.22; Current market price of the property: $1,475,667.71. A. -15.30% B. 8.60% C. 9.86% D. 10.00%

Q: Which of the following contract may be oral? A.Contracting to purchase specially manufactured goods for $300 where the seller has begun performance. B.Contracting to purchase specially manufactured goods for $500 where the seller has begun performance. C.Contracting for $500 worth of goods in which payment has been made and accepted but the seller has not yet begun performance. D.All of the above.

Q: Suppose you purchased an income producing property for $95,000 five years ago. In Year 1, you were able to negotiate a lease that paid $10,000 per year at the end of each year. If you are able to sell the property at the end of year 5 for $100,000 (after receiving our final lease payment), what was the internal rate of return (IRR) on this investment? A. -18.18% B. 1.03% C. 9.57% D. 11.37%

Q: Finishing the construction of a home two days after the contract called for completion (no injury occurs) most likely will be considered: A.Complete performance. B.Implied performance. C.Breach of contract. D.Substantial performance.

Q: Given the following information, calculate the NPV for this property. Initial cash outflow: $200,000, Discount rate: 15%, CF for year 1: $25,876, CF for year 2: $23,998, CF for year 3: $23,013, CF for year 4: $22,105, CF for year 5: $144,670. A. -$51,875 B. -$59,657 C. $140,343 D. $295,951

Q: The following contract must be in writing to be enforceable: A.A loan from your uncle in the amount of $2,000. B.An agreement to sculpt a statute within 12 months C.A $500.00 loan from your brother and you're using the money to buy land D.A two year contract to pay professional soccer.

Q: Given the following information, calculate the going-out cap rate. Estimated holding period: 5 years, NOI for year 1: $120,000, NOI for year 5: $150,000, NOI for year 6: $155,250, Expected sale price at end of year 5: $1,350,000. A. 8.9% B. 11.1% C. 11.5% D. 11.9%

Q: Ace Corporation calls Deuce Manufacturing and orally orders a custom built piece of equipment at a cost of $5,000. Deuce informs Ace that the equipment will take three weeks to assemble and that they are very backed up and will start on Wednesday. On Tuesday, Ace calls Deuce to cancel the order. A.Deuce may still enforce the contract because the machine was to be custom made. B.Ace may void the contract but will owe Deuce damages for expected profits. C.The contract was unenforceable from the beginning due to its oral nature so neither Ace nor Deuce have any rights. D.Ace has effectively voided the contract.

Q: Given the following information, calculate the appropriate after-tax discount rate. Tax rate on comparable risk investment: 35%, Investor's before-tax opportunity cost: 12%, Capitalization rate: 8%. A. 2.8% B. 4.2% C. 5.2% D. 7.8%

Q: Moe Corporation calls Curley Inc. and orally orders 500 widgets at $5.00 a piece. Curley Inc. sends a written conformation to Moe Corp. stating that 1000 widgets at $5.00 a piece will be delivered in one month. If Moe Corp wants to object to the terms of the written confirmation, they must do so within: A.5 days. B.10 days. C.15 days. D.They may object at the time of delivery.

Q: Given the following information, calculate the before-tax equity reversion (BTER). NOI: $89,100, Annual Debt Service: $58,444, Net Sale Proceeds: $974,700, Remaining Mortgage Balance: $631,026. A. $30,656 B. $343,674 C. $572,582 D. $885,600

Q: Each of the following is an exception to the written requirement for the sale of goods rule under the statute of Frauds except: A.A contract to purchase specially made goods on which the seller has begun performance. B.A contract between merchants in which the merchant sued has received written notice from the other merchant confirming the contract and the merchant being sued had not objected to the written confirmation within 10 days. C.A contract for goods in which the party being sued has admitted in court that a contract existed. D.A contract for the sale of goods in which six $100 pieces of machinery comprised the contract.

Q: Given the following information, calculate the estimated terminal value of the property at the end of its holding period. Going-out cap rate: 9%, Estimated holding period: 5 years, NOI for year 5: $100,500, NOI for year 6: $102,000. A. $1,113,333 B. $1,116,667 C. $1,133,333 D. $1,166,667

Q: Manny and Moe have entered into a written contract for the purchase of $1,000 worth of goods. While the contract is still executory, Manny calls Moe and seeks to make modifications to the contract. A.The modification does not need to be in writing to be enforceable as long as they agree. B.The modification does not need to be in writing to be enforceable unless the modification adds at least $500 worth of new goods to the contract. C.The modification does need to be in writing to satisfy statute of frauds requirements regardless of the size of the modification. D.Parties cannot modify contracts subject to the Statute of Frauds so they must enter into a new and separate contract.

Q: Many investors use mortgage debt to help finance capital investment for income-producing real estate. In doing so, the owner will receive income as long as the property produces enough income to cover all operating and capital expenditures, the mortgage payment, and all state and federal income taxes. Therefore, the owner's claim is commonlyreferred to as a:A. primary claimB. joint claimC. residual claimD. superior claim

Q: Fred has orally hired a world famous artist to paint his portrait. The cost is going to be $5,000 and the portrait is scheduled to take nine months to paint. Due to delays, the portrait takes thirteen months to complete. A.The contract is unenforceable because it took over a year to complete. B.The contract is unenforceable because it was for over $500.00. C.Both a and b make the contract unenforceable. D.The contract is enforceable.

Q: In discounted cash flow (DCF) analysis, the sale price of the property must be estimated at the end of the expected holding period. The most common method for determining the terminal value of the property is the: A. yield capitalization method B. direct capitalization method C. repeat-sales approach D. cost approach

Q: Which of the following contracts must be in writing? A.Buying a computer for $500. B.Renting a sailboat for $500. C.Hiring a painter to paint your hose for $500. D.All of the above must be in writing.

Q: Just as it is important for an investor to consider the impact of financial leverage on her return, it is also necessary to account for the effect of income taxes. How would the presence of income taxes impact the levered going-in IRR? A. Income taxes increase the levered going-in-IRR B. Income taxes reduce the levered going-in-IRR C. Income taxes do not affect the going-in-IRR D. Income taxes cause the levered going-in-IRR to become invalid as a measure of return.

Q: Stella is 18 years old and wants to buy a car. Although she has a job and can make the payments, the bank is hesitant to grant a loan because she has no credit history. Her dad agrees to be part of the original loan. A.Dad's promise to pay does not have to be in writing because he is guaranteeing performance. B.Dad's promise to pay does not have to be in writing because he is agreeing to become liable only should Stella not pay. C.Dad's promise to pay does have to be in writing because he is collaterally guaranteeing performance. D.Dad's promise to pay does have to be in writing because he is agreeing to become liable only should Stella not pay.

Q: An important piece of criteria for investors to consider when deciding between real estate investment opportunities and investing in stocks or bonds is the effect of income taxes on their return. For most investors, the effective tax rate on commercial real estate is: A. greater than the effective tax rate on a stock or bond investment B. equal to the effective tax rate on a stock or bond investment C. less than the effective tax rate on a stock or bond investment D. cannot be compared across asset classes.

Q: Alan's Saddles makes high level seats for racing bicycles and sells to many of the top bicycle manufacturers. There are eight available sources of the type of rubber that Alan's uses; however, they have always dealt with a company in the Republic of Anaerobia exclusively. Your company has a contract with Alan's for 10,000 seats. You have just received a letter from Alan's explaining that due to turmoil in Anaerobia, their supplier cannot export their product so Alan's cannot complete the contract. A.Alan's can get out of the contract based on impossibility of performance. B.Alan's can get out of the contract based on commercial impracticality because they can't be forced to buy from suppliers that they have never dealt with before. C.Your company can sue for breach because if the raw materials are reasonably available from another source, Alan's cannot be discharged due to impracticality. D.Your company can sue for specific performance if the seats are typical of all bicycle seats and not special or unique in any way.

Q: The use of financial leverage in purchasing an income-producing property can affect the amount of cash required at acquisition, the net cash flows from rental operations, the net cash flows from the eventual sale of the property, and the ultimate return on invested equity. Assuming the going-in IRR is greater than the effective borrowing cost, if an investor increases his leverage rate, say from 75% to 80%, we would expect which of the following to occur? A. Both NPV and going-in IRR increase B. NPV decreases, while going-in IRR increases C. NPV increases, while going-in IRR decreases D. Both NPV and going-in IRR decrease

Q: Which of the following does not constitute an interest in land that is required to be in writing under the statute of frauds? A.A twelve month lease to rent an apartment. B.A mortgage. C.A contract to erect a building on your land. D.An easement allowing someone to cross your land.

Q: While net present value (NPV) and internal rate of return (IRR) analysis both may be used as investment decision criteria, there are some limitations to the IRR method that make its use as an investment criterion problematic in certain situations. All of the following are limitations of the IRR method EXCEPT: A. IRR calculations assume that cash flows are reinvested at the IRR, rather than at the actual rate that investors expected to earn on reinvested cash flows. B. With the IRR decision criterion multiple solutions may exist for investments where the sign of the cash flows changes more than once over the expected holding period. C. The IRR methodology cannot be used to make comparisons across different investment opportunities. D. The use of IRR as a decision criterion will not necessarily result in wealth maximization for the investor.

Q: Bill and Ted enter into an oral contract. The contract was required to be in writing according to the Statute of Frauds. If a dispute occurs and the dispute is brought to court, the court will consider the contract: A.Valid. B.Void. C.Voidable. D.Unenforceable.

Q: The internal rate of return (IRR) on a proposed investment is the discount rate that makes the net present value of the investment: A. greater than zero B. equal to zero C. less than zero D. greater than the opportunity cost of not investing

Q: In Venture Media Limited Partnership v. Colt Plastics Company, Inc., the issues included what constitutes a valid offer. The court said: A.The exchange of forms alone cannot constitute a valid offer and acceptance without a specific contract. B.A proposal form that specifies that a purchase order will constitute an acceptance creates mutual assent when the forms are completed and exchanged. C.A proposal form that specifies that a purchase order will constitute an acceptance creates mutual assent when the forms are completed and exchanged only if the forms are accompanied by letters acknowledging the formation of the contract. D.A proposal form that specifies that a purchase order will constitute an acceptance does not create mutual assent because the mirror image rule is not satisfied when competing forms are involved.

Q: Changes in the discount rate used to complete net present value analysis can have a significant impact on the estimated value of the investment and therefore affect the overall investment decision. As the required internal rate of return (IRR) increases, the net present value will: A. decline B. increase C. remain the same D. become zero

Q: Most of our every day purchases involve: A.Implied concurrent conditions. B.Express conditions precedent. C.Express conditions subsequent. D.Implied conditions precedent and subsequent.

Q: Net present value (NPV) is interpreted using the following decision rule: The investor will purchase the property as long as the NPV is: A. greater than zero B. equal to zero C. less than zero D. equal to the opportunity cost of investment

Q: The Parole Evidence Rule says that certain contract must be in writing to be enforceable.

Q: It is common for investors in real estate to use mortgage debt to help finance capital investment. The use of debt can have a profound impact on the expected cash flows for a particular property. Which of the following terms refers to cash flows that represent the property's income after subtracting any payments due to the lender? A. Levered cash flows B. Unlevered cash flows C. Discounted cash flows D. Compounded cash flows

Q: Most contractual transactions we enter into are written.

Q: In discounted cash flow analysis, the industry standard for pro forma cash flow projections of investment properties is typically: A. 3 years B. 5 years C. 10 years D. 15 years

Q: A contract for the sale of $499.00 worth of land will not be valid if oral.

Q: While the general concepts of investment value and market value are very similar, there is an important distinction between the two. All of the following statements regarding investment value are true EXCEPT: A. Investment value is based on the expectations of a typical, or average, investor. B. Investment value is a function of estimated cash flows from annual operations C. Investment value takes into consideration estimated proceeds from the sale of the property D. Investment value applies a discount rate to future cash flows.

Q: Increased difficulty of performance or reduced profitability will constitute valid grounds for claiming impossibility of performance.

Q: To overcome the potential shortcomings of single-year decision making metrics, many investors in real estate also perform multiyear discounted cash flow (DCF) valuation. DCF valuation differs from the single-year ratio analysis in all of the following ways EXCEPT: A. Only with DCF must the investor estimate an appropriate investment horizon accounting for how long she will hold the property. B. Only with DCF must the investor select the appropriate yield at which to discount all expected future cash flows. C. Only with DCF must the investor make explicit forecasts of the property's net operating income for each year in the expected holding period. D. Only with DCF must the investor use a defensible cash flow estimates that incorporates appropriate measures of income and expenses.

Q: One party's tender of performance may satisfy a required condition leading to the other party's duty to perform.