Before you “Submit Quiz” (click below), be sure you have answered all your questions, including the first (signature and date). Remember, you MUST submit your paper showing your work on most free-response questions. Be sure to clearly write the question number for each of your responses. You can submit it through Canvas under the separate assignment “SYW for T1” within the next 30 minutes.  In the box below, feel free to leave any comments on this exam. I am interested in your feedback (positive or negative), honest comments, suggestions, and ideas for improvement.

Compare the energy released by an earthquake with a magnitude of 8.5 compared to another quake with a magnitude of 6.0. Write a complete sentence to answer this question.  Write ONLY your answer in the response box. Show your work which justifies your answer ON YOUR PAPER.  

Which method of election uses pairwise (one-on-one) comparisons between candidates?

Which homework questions are you supposed to do?

The number of residents in a small village grew by 8% to 1296 last year. How many residents were there the year before?

Answer 5 of these 7 questions (For questions 13-19 write SKIP for the 2 you do not want me to grade).   What factors affect a property’s projected NOI  (what is the formula for NOI?) ?

Answer 5 of these 7 questions (For questions 13-19 write SKIP for the 2 you do not want me to grade).    A.  What is the FORMULA for the  debt coverage ratio?   B.  What is the minimum level  the text report that banks require?  

Work this Problem You are an employee of University Consultants, Ltd., and have been given the following assignment.  You are to present an investment analysis of a new small residential income-producing property for sale to a potential investor.  The asking price for the property is $1,600,610; rents are estimated at $240,000 during the first year and are expected to grow at 2 percent per year thereafter.  Vacancies and collection losses are expected to be 7 percent of rents.  Operating expenses will be 40 percent of effective gross income.  A 75 percent loan can be obtained at 8 percent interest for 25 years(with monthly payments).  The property is expected to appreciate in value at 3 percent per year and is expected to be owned for THREE years and then sold.  In addition, the investor tells you she would also like to know how tax considerations affect your investment analysis.  You determine that the building represents 80 percent of value and would be depreciated over 30 years (use 1/30 per year).  The potential investor indicates that she is in the 36 percent tax bracket and has enough passive income from other activities so that any passive losses from this activity would not be subject to any passive activity loss limitations.  Capital gains from price appreciation will be taxed at 20 percent and depreciation recapture will be taxed at 25 percent.              A.  What is the annual debt service? .           B.  What is the first-year debt coverage ratio?             C.   What are the Before Tax cash flows for each year? (Include the before tax cash from from the sale of the building assuming selling costs of 2% of the sales price).             D.   What is the terminal capitalization rate?  (do not include the selling costs in the calculation)             E.   What is the investor’s expected before-tax internal rate of return on equity invested (BTIRR)             F.   Calculate the After Tax Cash Flows for each of the 3 years.             G.  What is the NPV using a 14 percent discount rate?  What does this mean?             H.   What is the investor’s expected after-tax internal rate of return on equity invested (ATIRR)? 

Answer 5 of these 8 questions (For questions 21-28 write SKIP for the 3 you do not want me to grade).    A.  Why might an investor prefer a loan with a lower interest rate and a participation? B.  Why might a lender prefer a loan with a lower interest rate and a participation?

Answer 5 of these 7 questions (For questions 13-19 write SKIP for the 2 you do not want me to grade).  When an income producing property is sold (as compared to a personal residence) how is the depreciation recapture treated compared to any capital gains?