The capitalization rate is established by:
The government
Investors in commercial real estate, and their view of risk and return.
Commercial real estate brokers
Commercial lenders.
5 points
QUESTION 2
The value of commercial real estate is based on:
Cash flow.
Whether the project is a limited service or a luxury property.
How much the seller’s want to sell the project for.
How much the project cost to build.
5 points
QUESTION 3
Describe “Pre-opening Expenses”.
For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).
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10 points
QUESTION 4
A hotel was valued at $7,500,000. It had produced annual cash flow last year of $300,000. What was the capitalization rate at the time this hotel was valued?
Your answer should include no decimal points, no percentage sign.
5 points
QUESTION 5
A hotel was valued at $12,000,000 two years ago. The cash flow of the hotel was increased by $100,000 this past year. The capitalization rate required by investors in commercial real estate currently is 7%.
By how much did the value of the hotel increase last year?
Your answer should include commas.
5 points
QUESTION 6
Lenders will typically lend only up to 60-70% of a hotel project value. Why?
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10 points
QUESTION 7
A hotel owner wishes to sell his hotel. Currently, his hotel is producing cash flow of $120,000 annually. Commercial investors are currently requiring a 12% capitalization rate to invest in property of this type.
How much is the hotel worth?
Your answer should include commas.
5 points
QUESTION 8
How can the value of a hotel be increased?
Renovate the guest rooms.
Produce greater cash flow.
None of the above
Change the franchise of the hotel