1. (TCO 9) The marginal rate of return for a property is ______ 2. (TCO 9) Consider the information in the table above. What is the marginal rate of return for keeping the property one additional year? 3. (TCO 9) A property could be sold today to provide an after-tax cash flow from sale of $800,000. The after-tax cash flow from operations next year is $40,000. If sold next year, the property is expected to provide an after-tax cash flow of $824,000. What is the marginal rate of return for holding the property for an additional year? 4. (TCO 9) A property could be sold today to provide an after-tax cash flow from sale of $800,000. The after-tax cash flow from operations next year is $40,000. If sold next year, the property is expected to provide an after-tax cash flow of $900,000. What is the marginal rate of return for holding the property for an additional year? 5. (TCO 9) A property could be sold today to provide an after-tax cash flow from sale of $800,000. The current after-tax cash flow from operations is $20,000, which is expected to grow by 4% per year. If sold next year, the property is expected to provide an after-tax cash flow of $824,000. What is the marginal rate of return for holding the property for an additional year? 6. (TCO 9) ________ can help an investor make a decision whether or not renovation is feasible and if refinancing should be used. 7. (TCO 9) An investor is considering renovating a building. 8. (TCO 9) Which of the following factors would NOT be considered when an investor is trying to decide whether to hold or sell a property at the end of year five? 9. (TCO 9) The return calculated assuming the property is held for one additional year is referred to as the _______ 10. (TCO 9) Which of the following is NOT a benefit of refinancing? 11. (TCO 9) An investor is considering refinancing a property. The current mortgage has an interest rate of 8.75% and a mortgage balance equal to 45% of the property value due to amortization of the loan and some appreciation in value. However, the investor would like to refinance at an amount equal to 75% of the property value. He has found out that the property can be refinanced at a 75% loan-to-value ratio over 15 years. What can be said about the incremental cost of refinancing? 12. (TCO 9) An investor purchased a building ten years ago when the building could be depreciated over 19 years. A new investor is interested in purchasing the building after the depreciable life according to tax laws changed to 15 years. Assuming both investors are in the same tax bracket and that everything else is equal, what can be said about the after-tax cash flow received by the new investor as compared to the after-tax cash flow that would be received by the original owner of the building? 13. (TCO 9) A strategy for deferring the recognition of capital gains when a property is sold is the use of a _____ 14. (TCO 9) When the profit ratio is less than 1, _______ 15. (TCO 9) If an investor takes a rehabilitation tax credit and disposes of a property during the first five years after a rehabilitated building has been placed in service
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