Given the following property acquisition information

30. Given the following property acquisition information, what is the required initial
equity investment due at time zero (the date of acquisition)?
• Asset Acquisit ion Price: $ 800,000.
• Loan -to-Value (LTV) ratio: 0.75 (or 75%)
• Fin ancing fees and costs: 3% of Loan Amount
A. $218,000.
B. $200,000.
C. $224,000.
D. $182,000.
E. $176,000.
31. A retail shopping center is purchased for CDN $2.1 million dollars. During the next
four (4) years, the property appreciates at four (4%) percent per year. At the time
of purchase, the property is financed at seventy-five (75%) percent loan-to-value
(LTV) mortgage loan payable according to a thirty-(30)-year amortization schedule.
The mortgage loan has an annualized contract interest rate of eight (8%) percent with
monthly amortization and compounding. At the end of year four (EOY 4), the property
is sold incurring eight (8%) percent selling expenses. What is the amount you calculate
will be the Before-Tax Equity Reversion (BTER)?

COMM 307 SAMPLE FINAL EXAM QUESTIONS Page 17 of 18
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Solution :
Item Description Amount
Loan Amount = 0.75 LTV x (CP of $2,100,000) $1,575,000
Monthly Mortgage Loan Payments 11,556.79
Remaining Mortgage Loan Balance 1,515,450
Gross Sale Price (GSP) [2,100,000 x (1.04) 4 ] 2,456,703
Less: Selling Expenses (SE) (at 8% of SP) 196,536
Net Sale Proceeds (NSP) 2,260,167
Less: Remaining Mortgage Loan Balance 1,515,450
Before-Tax Equity Reversion (BTER) $ 744,717
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Scenario:
32. If the site you are acquiring in downtown Vancouver, is 1.40 acres in gross land
area and the zoning ordinance restricts the maximum gross square footage you may
develop on the site (without any zoning change or variance requests) to a Gross Building
Area of 335,412 square feet, what is the Floor Space Ratio (“FSR”)?
_________________________________
Solution:
Gross Building Area (GBA) permissible / Gross Land Area comprising Site = FSR
Thus, FSR = 335,412 SF / [1.40 acres X 43,560 SF per acre] = FSR
FSR = 335,412 SF / 60,984 SF = FSR = 5.5
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COMM 307 SAMPLE FINAL EXAM QUESTIONS Page 18 of 18
34. The term “ residual land value ” is best described by which of the following statements?
A. The highest and best use valuation of a property less the appraised value of land when
utilized fully to its highest and best use.
B. The highest and best use valuation less the amount derived when discounting the long
term value of a property’s income potential.
C. The highest and best use valuation of a property less the land acquisition cost.
D. The highest and best use valuation of property less the cost of all resources utilized to
reach its highest and best use.
35. The Modified Internal Rate of Return (“MIRR”) approaches discounted cash flow analysis
in much the same format as the IRR, but incorporates some additional rates to the
treatment of all cash flows to derive its final result. The features of the MIRR that
differentiate it from the IRR are _____________:
END OF STUDY QUESTIONS – FINAL EXAM PREPARATION