Q&A Hero

Q: Which of the following classifications of property maintenance includes the day-to-day cleaning and upkeep required to maintain value and tenants? A. Custodial maintenance B. Corrective maintenance C. Preventive maintenance D. Deferred maintenance

Q: Someone shopping for a new suit at a department store is much more likely to stop at a nearby shoe store than a nearby bakery or drugstore. This scenario highlights the importance of which of the following determinants of the income-producing ability of the property? A. Tenant mix B. Preventive maintenance C. Rehabilitation D. Professional designation

Q: When property managers are looking to lease residential units to households whose prior history indicates a probability of long-term occupancy, they are seeking what is referred to as: A. permanence potential B. synergism C. rehabilitation D. adaptive reuse

Q: The real estate industry applies which of the following labels to individuals who are responsible for the day-to-day operations of the property. A. Asset manager B. Property manager C. Leasing broker D. Tenant

Q: A property management contract establishes an agency relationship between the manager and the owner. Considering that the management fee is often calculated as a percentage of gross income, this would seem to create an agency problem in that the agreement does not give managers the incentives to control operating expenses while they attempt to increase rental income. Though seldom the case, basing the property management fee on which of the following measures would, in theory, better align the interests of the owner and manager? A. Effective gross income B. Net operating income C. Miscellaneous income D. Capital expenditures

Q: Despite the magnitude of their real estate holdings, many non-real estate corporations have historically expended little effort to manage these assets effectively. Recently, the development of which of the following markets has helped to quell concerns related to this issue? A. Commercial mortgage backed securities (CMBS) B. Sale-leaseback C. Tenancy-in-common (TIC) D. Installment sale

Q: In contrast to maintenance and repair expenditures, which are operating expenses, the improvement decision generally involves a capital expenditure meant to increase the value of the structure. Which of the following classifications of improvements calls for the restoration of a property to satisfactory condition without changing the floor plan, form, or style of the structure? A. Rehabilitation B. Remodeling C. Adaptive reuse D. Conversion

Q: With a performance-based management contract, an asset managers fees are tied directly to the rate of return earned by investors on the portfolio of managed properties relative to a benchmark. In private commercial real estate, the choice of benchmarks for performance is limited in large part to return indices provided by which of the following organizations? A. Standard and Poors B. National Association of Real Estate Investment Trusts C. National Council of Real Estate Investment Fiduciaries D. Wilshire Associates

Q: Real estate asset managers perform certain functions that would not be expected of asset managers who deal with stock and bond portfolios. Which of the following functions would you expect both asset managers in real estate as well as stocks / bonds to perform? A. Find specific assets in which the owners/client can invest B. Monitor asset performance C. Negotiate the acquisition price of assets D. Oversee due diligence and closing

Q: While college-level courses are not widely available, a number of professional and trade organizations exist in the field of property management. Which of the following certifications awarded by the Institute of Real Estate Management is aimed at individuals who manage larger, residential, office, industrial, or retail properties? A. Certified Property Manager (CPM) B. Accredited Resident Manager (ARM) C. Real Property Administrator (RPA) D. Member of Appraisal Institute (MAI)

Q: The management agreement provides for a management fee that is usually in the range of 3 to 6% of which of the following measures of property income? A. Potential gross income B. Effective gross income C. Net operating income D. Income tax liability

Q: Both owners and managers must carefully designate their responsibilities in the management agreement. In a management agreement, all of the following would typically be responsibilities of the property manager EXCEPT: A. Maintenance of financial accounts for money collected from tenants B. Liability C. General property management D. Reports on property performance

Q: While some property owners choose to perform both the property and asset manager functions themselves, many commercial property owners choose to employ professional property managers instead. The property manager works under a management contract in which the manager is empowered to serve as the owners fiduciary. This type of relationship is more commonly referred to as a(n): A. agency relationship B. open listing relationship C. joint-venture D. correspondent relationship

Q: An owner whose property is in a strong market position, where fewer services can be offered to tenants for the same dollar of rental income and where the owner will not lose tenants if the property is under-maintained, is said to participate in a market that has: A. a relatively elastic demand for space B. a relatively inelastic demand for space C. economies of scale D. diseconomies of scale

Q: Maintenance and repair of a property is an ongoing process that can be divided into four principal categories. Which of the following classifications includes ordinary repairs to a building on a day-to-day basis (e.g. repairing a broken window, fixing a leaking roof)? A. Custodial maintenance B. Corrective maintenance C. Preventive maintenance D. Deferred maintenance

Q: Concerned with a potential information asymmetry problem, state legislators have been proactive in passing legislation that protects the rights and interests of tenants within which of the following property types? A. Office B. Retail C. Industrial D. Apartment

Q: The lease is a contract between the owner and the tenant that transfers exclusive use and possession of the space to the tenant in return for rent or other consideration. In this arrangement, the owner is referred to as the: A. lessor B. lessee C. agent D. benchmark

Q: When property managers are looking to secure a mix of tenants for which the whole is greater than the sum of its parts, or in other words a group of tenants that shares similar characteristics such that the experience of living together is mutually beneficial, they are seeking what is referred to as: A. permanence potential B. synergism C. rehabilitation D. adaptive reuse

Q: For residential properties, the ratio of prospective rent to gross monthly income is a valuable screening tool in judging a potential tenants ability to fulfill rent obligations. Generally, this ratio should not exceed: A. 10% B. 20% C. 30% D. 40%

Q: When leasing nonresidential properties, owners would prefer to rent exclusively to high quality tenants. Such owners will tend to seek out companies whose general debt obligations are rated investment grade by one or more of the U.S. rating agencies. These potential tenants are more commonly referred to as: A. tenant reps B. credit tenants C. tenant mix D. in-house leasing agents

Q: Leases are considered the engines that drive property values. Therefore, it should not be surprising that owners of commercial property may seek an independent leasing broker to focus on finding tenants to lease space. In exchange for their services, leasing brokers are paid a commission based on what percentage of the face amount of the lease? A. 0.5 to 1.5% B. 3 to 5% C. 7 to 10% D. 15 to 20%

Q: The real estate industry applies which of the following labels to individuals who are responsible for the decisions that affect the physical, financial, or ownership structure of the property. A. Asset manager B. Property manager C. Leasing manager D. Regional manager

Q: Commercial real estate returns are determined in no small part by how well the ongoing management function is performed. Management decisions can be classified into two categories: property management and asset management. Which of the following functions would be considered a primary responsibility of an asset manager? A. Property acquisitions and dispositions B. Marketing a property to prospective tenants C. Maintaining the condition of the property D. Signing leases

Q: Unlike many publicly traded stock and bond investments, commercial real estate investments: A. can be bought and sold in highly liquid markets. B. yield maximized returns when assets are held for short periods of time. C. yield returns generated mostly from the assets net operating income, rather than price appreciation. D. have going-in and going-out transaction costs that are low (as a proportion of asset value).

Q: Suppose that you are able to generate an annual depreciation deduction of $20,000 that would otherwise have been taxed at a 30% rate each year for 7 years. Suppose that your taxes due on sale in year 7 will be $32,000 greater than if the property had not been depreciated. Determine the net benefit of depreciation assuming a discount rate of 6.5%. A. $12,315 B. $20,592 C. $32,907 D. $53,499

Q: Tax depreciation shelters a portion of annual operating income from taxation. However, the amount of cumulative tax depreciation is taxed when the property is sold. Suppose that your taxes due on sale will be $35,000 greater than if the property had not been depreciated. If the sale were to occur 5 years from now, determine the present value of the tax on depreciation recapture in the year of sale assuming a discount rate of 9.5%. A. $22,233 B. $31,963 C. $55,098 D. $134,390

Q: Suppose that you are able to generate an annual depreciation deduction of $34,000 that would otherwise have been taxed at a 30% rate each year for 5 years. Determine the present value of the annual tax savings using a 7.5% discount rate. A. $26,683 B. $41,268 C. $96,292 D. $137,560

Q: Given the following information, determine the unrecovered depreciable basis: Depreciable Basis: $300,000, Declining Balance Depreciation: 200%, Cost Recovery Period: 7 years. A. $42,857 B. $85,714 C. $214,286 D. $257,143

Q: Given the following information, calculate the accelerated rate of depreciation that can be applied to the unrecovered basis. Depreciable Basis: $100,000, Declining Balance Depreciation: 150%, Cost Recovery Period: 15 years. A. 3.63% B. 5.56% C. 6.67% D. 10.0%

Q: Given the following information, calculate the straight-line depreciation rate for the second year. Cost recovery period: 27 years, Date of purchase: June 12th. A. 1.67% B. 1.97% C. 3.63% D. 20.0%

Q: Accelerated methods of depreciation result in greater depreciation allowances than straight-line depreciation in the early years of the depreciation schedule. Suppose a personal property is eligible for a three-year cost recovery period and can be depreciated using 200 percent declining balance depreciation. Calculate the accelerated depreciation rate in the first year. A. 14.28% B. 28.57% C. 33.33% D. 66.66%

Q: The tax treatment of up-front financing costs calls for these expenses to be amortized over the life of the loan. However, if the loan is prepaid prior to the term of the loan (perhaps because the property is sold), the tax treatment of these costs changes. If up-front financing costs on a 30-year loan total $6,000, and the loan is prepaid in full at the end of year 5, what is the maximum amount that the investor can deduct when calculating taxable income from rental operations in year 5? A. $5,000 B. $5,200 C. $5,600 D. $6,000

Q: The use of mortgage debt to finance an income property investment has certain tax consequences. For example, up-front financing costs for investment properties are not fully deductible in the year in which they are paid. Instead, they must be amortized over the life of the loan. If up-front financing costs on a 30-year loan total $6,000, what is the maximum amount per year that the investor can deduct when calculating taxable income from rental operations? (Assume that there is no prepayment on the loan) A. $100 B. $200 C. $2,400 D. $6,000

Q: Given the following information, calculate the taxes due on sale for the following fully taxable sale. Net Sale Proceeds: $1,500,000, Adjustable Basis: $830,000, Depreciation Recapture: $150,000, Capital Gain Tax: 15%, Depreciation Recapture tax: 25%. A. $37,500 B. $78,000 C. $100,500 D. $115,500

Q: Given the following information, calculate the depreciation allowance for year 1. Depreciable Basis: $200,000, Declining Balance Depreciation: 175%, Cost Recovery Period: 27 years. A. $3,704 B. $6,481 C. $7,407 D. $12,963

Q: Given the following information, calculate the straight-line depreciation rate for the first year using the midmonth convention. Cost recovery period: 27 years, Date of purchase: April 10th. A. 2.6% B. 3.63% C. 19.5% D. 70.8%

Q: Homeowners receive preferential tax treatment under current federal income tax laws. The benefits that homeowners receive from this treatment include all of the following EXCEPT: A. Appreciation in the value of the home that has occurred since the time of purchase is excluded from federal taxable income B. Homeowners can deduct their mortgage interest expenses on both first (primary) and second homes from federal taxable income C. Homeowners can deduct local property taxes from federal taxable income D. Losses on the sale of a personal residence can be deducted from federal taxable income

Q: The tax treatment of real estate holdings that are classified as trade or business property and are held for more than one year is more commonly referred to as which of the following sections of the tax code? A. Section 1231 B. Section 1031 C. Section 856 D. Section 851

Q: Limited liability companies (LLCs) and limited partnerships are preferred to corporate ownership structures because these forms of ownership allow investors to obtain limited liability and avoid the double taxation faced by corporations. This tax benefit can be extremely important as the maximum capital gain rate for corporations remains at (as of 2016): A. 15% B. 25% C. 35% D. 45%

Q: Sharon purchased a new photocopier for her business. According to her accountant, she can deduct 1/7th of its original cost each year for the next seven years from her taxable income. This depreciation method is commonly referred to as: A. declining balance method B. straight line method C. sum of the years digits method D. modified accelerated cost recovery system

Q: Johnson Builders is in the new residential construction business. They built a house that sat empty for 6 months after its completion. This type of property would be categorized as a: A. personal residence B. dealer property C. trade or business property D. investment property

Q: All taxable income from investment property sales must eventually be classified as either ordinary income, depreciation recapture income, or capital gain income. What is the maximum tax rate that an investor can be charged on depreciation recapture income? A. 10% B. 15% C. 25% D. 35%

Q: The benefit of being classified as a capital gain is that the income is subject to a tax rate that maxes out at 20%, which may be well below the tax rates associated with depreciation recapture income and ordinary income for a particular investor. In order to qualify for the lower capital gain tax rate, the property being sold must be held for more than: A. 1 month B. 3 months C. 6 months D. 12 months

Q: In a like-kind exchange, property owners must meet a number of conditions in order to be eligible to take advantage of this tax deferment. One criterion is for the exchange to be between like-kind properties. Which of the following exchanges represents an example of an eligible like-kind exchange? A. An apartment property for shares in a publicly traded REIT B. A retail property in the U.S. for a retail property in China C. An office property for a principal residence. D. A retail property for an office property, both within the U.S.

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: 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 investors tax liability by an amount dependent on the individuals income tax bracket. B. A $1 tax credit reduces the investors tax liability by $1. C. A $1 tax credit increases the investors taxable income by $1 D. A $1 tax credit has exactly the same impact on an investors tax liability as a tax deduction.

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: 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 propertys 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: Certain costs associated with a propertys 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: 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 2016, an individual making between $91,151 and $190,150 would fall into which of the following tax brackets? A. 15% B. 25% C. 28% D. 35%

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: 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: 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: 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: 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: 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: 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 investors 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: 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: 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: 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 propertys 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: 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: 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: 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 propertys net operating income for each year in the expected holding period. D. Only with DCF must the investor use a defensible cash flow estimate that incorporates appropriate measures of income and expenses.

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: 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: Given the following expected cash flow stream, determine the NPV of the investment opportunity. Investment Horizon: 3 years; End of first year NOI estimate: $886,464; End of second year NOI estimate: $913,058; End of third year NOI estimate: $940,450; Price at which the property is expected to be sold at the end of year 3: $5,000,000; Current market price of the property: $6,200,000; Discount rate: 9%. A. -$321,010.66 B. -$28,451 C. +$28,451 D. +$321,010.66

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

Q: Given the following expected cash flow stream, determine the IRR of the proposed investment in an income producing property and determine whether or not the investment should be pursued using IRR as your decision making criteria. 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; Required return on equity: 5%; Current Market Price of Property: $1,750,000 A. IRR is 4.92%; Decision is to invest B. IRR is 4.92%; Decision is to not invest C. IRR is 5.72%; Decision is to invest D. IRR is 5.72%; Decision is to not invest

Q: Determine the net present value (NPV) of an investment decision to purchase a property for $90,000 that will generate annual cash flows of $10,000 per year for eight years and sell for $80,000 at the end of the eight year holding period, if the appropriate discount rate is 10%? (Note: assume payments are made at end of year) A. -$2,475 B. - $609 C. + $609 D. +$2,475

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: Suppose an industrial building can be purchased for $2,500,000 and is expected to yield cash flows of $180,000 each of the next five years (Note: assume payments are made at end of year). If the building can be sold at the end of the fifth year for $2,800,000, calculate the IRR for this investment over the five year holding period. A. 0.09% B. 4.57% C. 9.20% D. 10.37%

Q: Based on your understanding of the differences between levered and unlevered cash flows, which of the following is an example of a levered cash flow? A. Net operating income B. Net Sale Proceeds C. Sale price D. Before-tax cash flow

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: $241,163 A. 11.2% B. 13.3% C. 15.4% D. 20.3%

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 owners claim is commonly referred to as a: A. primary claim B. joint claim C. residual claim D. superior claim

Q: Given the following information regarding an income producing property, determine the after tax net present value (NPV). 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: $241,163; After Tax Opportunity Cost: 11.2% A. -$40,858 B. -$91,785 C. $40,858 D. $91,785

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: 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: 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.