Formulas

Question 1

Degree of Operating Leverage

Answer 1

DOL = n(erpu-vepu) / n(erpu-vepu) - FE

Question 2

Breakeven Point

Answer 2

n = FE / (erpu-vepu)

Reached when total OE = EGI

Question 3

Gross Income Multiplier

Answer 3

GIM = Sale or Purchase Price / EGI

Question 4

Overall Capitalization Rate

Answer 4

OCR = NOI / Sale or Purchase Price

Question 5

Before-Tax Income

Answer 5

BTI = NOI - (Interest + Depreciation)

Question 6

Before-Tax Cash Flow

Answer 6

BTCF = NOI - (Interest + Principal)

Question 7

NOI Ratio

Answer 7

NOI Ratio = NOI / EGI

Question 8

Equity Capitalization Rate

Answer 8

RE = NOI-Annual Debt Service / Sale Price-Mortgage = Cash Flow / Equity

Question 9

Mortgage Constant

Answer 9

RM = Annual Debt Service / Principal Amount of Mortgage

Question 10

Operating Expense Ratio

Answer 10

OER = Total Operating Expenses (TOE) / Effective Gross Income (EGI)

Question 11

Income Tax Payable

Answer 11

(NOI - Interest - CCA) x Tax Rate

Question 12

After-Tax Cash Flow

Answer 12

ATCF = BTCF - income tax payable

Question 13

BTI is used for what type of analysis?

Answer 13

Income Statement Analysis

Question 14

BTCF is used for what type of analysis?

Answer 14

Cash Flow Analysis

Question 15

Equity Dividend

Answer 15

Stabilized NOI = NOI - replacement allowance

Equity Dividend = Stabilized NOI - principal - interest

Question 16

Equity Dividend is used in what type of analysis?

Answer 16

Appraisal

Question 17

Net Sale Price

Answer 17

Gross Sale Price - commission - legal fees

Question 18

Before-Tax Reversion

Answer 18

Net Sale Price - OSB on debt

Question 19

After-Tax Reversion

Answer 19

Before-Tax Reversion - capital gains tax - recapture tax