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Effects of Capitalization on Real Estate Valuation

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

When using the IRV formula, the 'R' stands for _____

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1. In performing the mathematical process where future income is converted into present value, estimated operating expenses include:

2. _____ is an appraisal process that attempts to predict functional and external obsolescence. It is not always easily predicted, due to a number of outside factors.

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About This Quiz & Worksheet

See what you know with this interactive quiz and printable worksheet. The questions ask you about a formula, definitions and determining effective gross income.

Quiz & Worksheet Goals

Test yourself on these topics:

  • A step to determine the effective gross income of an investment property
  • Evaluating attractiveness of investments using future free cash flow estimates
  • Appraisal process to predict functional and external obsolescence
  • Converting future income into present value
  • The IRV formula

Skills Practiced

  • Defining key concepts - ensure that you can accurately define main phrases related to using the appraisal process to predict functional and external obsolescence and estimating attractiveness of an estimate
  • Information recall - access the knowledge you've gained regarding the effective gross income of an investment property
  • Reading comprehension - ensure that you draw the most important information from the related capitalization and real estate lesson

Additional Learning

Review the lesson titled Effects of Capitalization on Real Estate Valuation to learn more about concepts related to this topic. These areas are covered:

  • The income approach to appraisal
  • Calculating the capitalization rate
  • Band of investment method
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