An overall capitalization rate is calculated as follows:
A) average annual income stream divided into market value
B) average annual income stream multiplied by market value
C) market value divided by average annual income stream
D) market value divided into average annual income stream
Which of the following is true about the income stream under the income capitalization approach?
A) It is projected into the future because future earnings result in value
B) It is based in the assumption that the income stream will continue indefinitely
C) It should never be stated in inflated dollars
D) It is an average of past and future earnings
Which of the following is not a step in the income-capitalization approach?
A) derive the appropriate capitalization rate
B) apply the capitalization rate to net income after tax
C) apply the capitalization rate to the income stream
D) project the property's income stream over its future economic life
The sales comparison approach is:
A) useful because it requires few adjustments B) the method favored by Stephen Rushmore
C) seldom used in the hospitality industry D) often used in the hospitality industry
The sales comparison approach is based on:
A) a comparison of the subject property to sales values of similar properties that are currently for sale
B) projected sales values of similar properties
C) expected sales values of similar properties
D) a comparison of the subject property to sales values of similar properties that have recently been sold
Sunrise Inn uses the cost approach to value its property. Based on the data below, what is the appraised value of the Sunrise Inn?
Reproduction Costs 20,000,000
Accrual Depreciation 4,250,000
Estimated FF&E value 150,000
Estimated land value 625,000
A) 16,525,000 B) 15,900,000 C) 20,775,000 D) 15,750,000
The estimate of land value is often based on a:
A) carrying value approach B) cost approach
C) sales comparison approach D) gross book value approach
Which of the following is not a major approach to valuation of hospitality real estate?
A) sales comparison B) cost
C) income capitalization D) debt capitalization
The shelf life of an appraisal report is generally limited to:
A) one year B) two months C) six months D) two years
A fee simple title is:
A) an estate with limitations B) an estate that is simple to value
C) an estate with restrictions D) an estate without limitations or restrictions
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