BOMI (Chapters 1-2): Questions With Complete
Answers
List the seven valuation criteria specific to real property Right Ans -
location and construction, production of growth capital, production of income,
durability, response to change, enhancement of activities within a building,
productivity
What is the difference between a capital investment and income? Right Ans
- Capital investment: is where monies are invested to produce or increase
asset value. (not recognized until an asset is sold)
Income: is generated from the rental of a building that is reflected on an
income statement during the period it was earned.
Define churn rate. Right Ans - the percentage of a space inventory that is
reconfigured in some way (walls, furniture, finishes, utilities) in a year.
What is the overall goal of the property manager? Right Ans - Their goal is
to keep the building full of tenants and running efficiently, maximizing net
income for the owner while minimizing risks.
Define investment ROI (return on investment) and capital ROI. Right Ans -
Investment ROI: is the return on the investment while it is being held
Capital ROI: is the return on the investment when they are done with it.
What are the four standard financial evaluation techniques typically applied
to investment/production decisions? Right Ans - break-even (cost benefit)
analysis, payback analysis, net present value analysis, internal rate of return
Define the evaluation technique of payback analysis. Right Ans - evaluates
the length of time required to pay the investor back for the quantity of capital
inputs.
Answers
List the seven valuation criteria specific to real property Right Ans -
location and construction, production of growth capital, production of income,
durability, response to change, enhancement of activities within a building,
productivity
What is the difference between a capital investment and income? Right Ans
- Capital investment: is where monies are invested to produce or increase
asset value. (not recognized until an asset is sold)
Income: is generated from the rental of a building that is reflected on an
income statement during the period it was earned.
Define churn rate. Right Ans - the percentage of a space inventory that is
reconfigured in some way (walls, furniture, finishes, utilities) in a year.
What is the overall goal of the property manager? Right Ans - Their goal is
to keep the building full of tenants and running efficiently, maximizing net
income for the owner while minimizing risks.
Define investment ROI (return on investment) and capital ROI. Right Ans -
Investment ROI: is the return on the investment while it is being held
Capital ROI: is the return on the investment when they are done with it.
What are the four standard financial evaluation techniques typically applied
to investment/production decisions? Right Ans - break-even (cost benefit)
analysis, payback analysis, net present value analysis, internal rate of return
Define the evaluation technique of payback analysis. Right Ans - evaluates
the length of time required to pay the investor back for the quantity of capital
inputs.
