Exam 3 Questions

1. If your discount rate is 12%, what would you prefer: 5,000 in 5 years or 10,000 in 9 years?
2. What are the two ways you can finance real estate in Saudi Arabia?
3. What kind of financing occurs when the bank holds the deed until the loan is paid off? 
4. What kind of financing occurs when the bank puts a lien on the deed until the loan is paid off?
5. What are the six elements that appear in a mortgage financing note?
6. Who is in charge of regulating the real estate mortgage market in Saudi Arabia?
7. What is needed to increase trust in the real estate financing market?
8. What is a default?
9. What is the difference between a recourse and a non-recourse loan?
10. Would you prefer a fixed rate or adjustable rate mortgage and why?
11. What is a margin on an adjustable rate loan?
12. What is the difference between possession and title?
13. How can you improve yield on a commercial property investment?
14. Why do we use ratios in real estate analysis?
15. What are the three categories on ratios?
16. What is the internal rate of return?
17. If the NOI multiplier is 15, what is the capitalization rate?
18. What is the building efficiency ratio?
19. How do you calcuate the mortgage constant rate?
20. When do you use leverage ratios?
21. What is the maximum LTV ratio in Saudi Arabia?
22. What is the minimum DCR banks like to see?
23. Can you estimate EGIM without talking to the building owner?
24. What does a LBR of 7.5 mean?
25. If the capitalization rate is 6.0%, what is the NOI multiplier?
26. If the EGIM is 12 and your property has an effective gross income of 100,000 a year, what is your estimate of value?

Assume the following cash flows:

Period	Cash Flow
0	(1,000)
1	100
2	110
3	105
4	112
5	1,050

27. What is the IRR?
28. If you paid 800 instead of 1,000, what would be your IRR?
 
Assume the following cash flows:

1	5,000.00
2	6,000.00
3	5,000.00
4	9,000.00
5	100,000.00

29. What is the maximum you should pay for this property if your target rate was 9.0%?
30. What is the maximum you should pay for this property if your target rate was 7.0%?