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CGA EXACT QUESTIONS AND ANSWERS
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CGA EXACT QUESTIONS AND ANSWERS
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CGA EXACT QUESTIONS AND ANSWERSThe "as vacant" highest and best use is for retail and the as improved highest and best
use is for single tenant-office .... What principle underlies the valuation process? -
Answers -Consistent Use
A property's site is leased for $40,000 per year, which is considered the market rate.
The site represents 35% of the total value. The overall cap rate is 10% and the building
cap rate is 11%. What is the site value? - Answers -$491,228
A property was purchased for $325, 000 and the buyer expected to hold the property for
five years. The pro forma projections call for a net oper. incoome of $30,000 for Yrs 1 &
2, $35,000 for Yrs 3& 4 and $37,000 for Yr. 5. The property is expected to increase in
value to $375k at the end of the holding period. What is the overall capitalization rate
from the investment? - Answers -12.5%
In preparing a market value appraisal with retrospective date of value, is the appraiser
allowed to consider any info after the eff. date of value, and why? - Answers -Yes, the
appraiser may use data subsequent to the eff. date as a confirmation of trends.
Which of the following demand-side economic factors creates value? - Answers -Desire
and effective purchasing power
*"Always Appears" - If the overall cap rate for the fee simple interest is 10% and the
leased fee cap rate is 8.5%, market net operating income is $20,000 and contract net
operating income is $12,500. What is the implied leasehold cap rate? - Answers -
14.17%
A staff appraiser, employed by a local bank for 5 years, plans to leave the bank to open
an independent appraisal business. Must the appraiser remove all work files for
assignments completed for the bank? - Answers -No; the appraiser may make
arrangements with the bank to access or retrieve the files.
At the end of yr. 5 the owner sold the property for $975,000. What is the IRR from this
investment? - Answers -8.51%
An office building is expected to generate the following over its 5 year holding period:
Yr 1: $120,000
Yr 2: $130,000
Yr. 3: $120,000
Yr. 4: $140,000
Yr. 5: $145,000
If the appropriate yield rate is 13% what is the level income equivalent of this income
stream? - Answers -$129, 572
, What technique can be utilized to value a leasehold estate? - Answers -Present worth of
the rent advantage.
The appraiser is asked to value a proposed assisted living facility. The appraiser
surveys the bed count and occupancy at existing faciiliites, checks with local authorities
on other proposed facilities, and interviews operators about any planned closure of
beds. What portion of the market analysis has the appraiser completed? - Answers -
Supply analysis
A retail space has a net rentable area of 10,000 sf. Market rent is $24 per sf per year.
Contract rent is $22 per sf per year... Considering a 5 yr holding period, how should the
excess rent be discounted in the appraisal of this property? - Answers -At a rate lower
than market rent.
A developer has a rectangular 5-acre site with a commercial zoning designation
allowing mini-storage, office, retail or apartments. Given these factors, if the building
capitalization rate is 10% and the land cap rate is 7.5%, what is the market value per sf
of the site under the highest and best use? - Answers -$15.00 per sf (or 19.50??)
An appraiser has been requested to appraise a poultry farm. This type of farm is
typically not leased, but is owner operated. Gross income from the poultry operation
was reported at 150k. Expenses were:
Ad valorem taxes: $1500
Building Insurance: $1000
Utilities: $12000
Interest: $48000
Depreciation: $18000
Salaries: $24000
Repair and Maintenance: $8000
Management: $12000 - Answers -$91,500 (minus all except interest & depreciation)
An investor can purchase a property with a mortgage of 70% loan-to-value ratio, an
annual interest rate of 6.5%, payable in level monthly installments over 20 years. The
required equity dividend rate is estimated to be 8%. What is the indicated overall cap
rate? - Answers -8.66
An appraiser receives an assignment to review an appraisal completed six months ago.
In the development of the review, the appraiser has gathered the pertinent information
and began the reporting process. Which of the following information must be included in
the report? - Answers -Identity of the client and intended users, intended use, effective
date of the original appraisal
A developer has a rectangular 5-acre site with a commercial zoning designation
allowing mini-storage, office, retails, or apartments. The land is under contract for
purchase for 3.35 million and the minimum acceptable land cap rate is 6%. Building cap
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