Module 8

Term
1 / 23
Which of the following statements best describes entrepreneurial incentive?
the amount of money entrepreneurs can borrow
the amount of money entrepreneurs expect to receive as a reward for their efforts
the amount of money entrepreneurs receive as a reward for their efforts
the amount of money reserved for unforeseen expenses
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Terms in this set (23)
Which of the following statements best describes entrepreneurial incentive?
the amount of money entrepreneurs can borrow
the amount of money entrepreneurs expect to receive as a reward for their efforts
the amount of money entrepreneurs receive as a reward for their efforts
the amount of money reserved for unforeseen expenses
2
Chandra is appraising a residential property. The house was built in 1981 and is in average condition. The appraiser is using a cost service provider to develop the cost approach. What type of cost will she be using in this appraisal?
hard costs plus entrepreneurial profit
reproduction cost
replacement cost
direct costs only
3
An appraiser asks a local building contractor for cost data. The contractor gives his best estimate to build an exact replica of the property being appraised. What could this data be called?
reproduction cost
hard costs
soft costs
replacement cost
1
If an appraiser estimates the current cost of individual units of construction and adds them up, what method is the appraiser using?
cost-index trending
unit-in-place
quantity survey
comparative unit
2
The cost approach might be the only approach available to an appraiser when appraising
a library.
a multiunit apartment property.
a retail shopping center.
a warehouse.
1
After an intense natural disaster creates the need for massive rebuilding, the cost of building materials increases. Which economic principle does this illustrate?
substitution
supply and demand
highest and best use
externalities
2
An estimate of replacement cost includes which of the following?

long-lived items only

all items at today's prices and with modern materials, including none of the deficiencies caused by changes in building techniques

all items at their historical cost when they were installed new

the estimated cost of all items as of the effective date of appraisal with materials as they were installed
2
The second step of the cost approach is to estimate direct (hard) and indirect (soft) costs as of
the effective date of the appraisal.
the date the loan will be closed.
the date the improvements were constructed.
the date of the report.
1
The federal government increases interest rates by a 1/4 point, causing a newly constructed building to be worth less than its cost. What principle does this illustrate?
externalities
supply and demand
highest and best use
substitution
1
The first step of the cost approach is to estimate
the cost of the improvements.
the depreciation present.
the contributory value of site improvements.
the value of the site as if vacant and available to be put to its highest and best use.
4
What method is being used when an appraiser estimates the cost of construction by considering the quantity and quality of all materials, as well as all categories of required labor, and unit costs are applied? unit-in-place cost-index trending quantity survey comparative unit3The total construction cost of a structure requires consideration of which of the following? direct and indirect costs only direct costs only direct and indirect costs along with entrepreneurial incentive indirect costs only3In terms of cost, what type of cost are appraisal fees? indirect costs only direct costs only direct and indirect costs along with entrepreneurial incentive direct and indirect costs only1Which of the following best describes direct costs? expenditures for the labor and material used in the construction of the improvements the costs associated with a change in title expenditures for items that are necessary but are not usually included in the construction contract an incentive that is market derived and provides compensation for the developer1When an appraiser estimates cost using a cost manual, which method is being used? cost-index trending quantity survey comparative unit unit-in-place3To which kind of cost should an appraiser attribute labor and materials to? replacement cost reproduction cost indirect cost direct cost4An appraiser measuring a residential structure would most likely use net rentable area. gross leasable area. gross building area. gross living area.4When performing a cost analysis, where can an appraiser obtain information about the entrepreneurial incentive? base it on national averages logically assume there is no incentive use data from a published cost service derive it from the local market4Which of the following best describes gross living area (GLA) in single-unit residences? GLA includes the basement. GLA is the above-grade, finished, habitable, residential space measured from the outside. GLA is measured from the interior of the walls. GLA includes the garage.2A buyer will not pay more for a property than the cost to construct one of equal desirability and utility without undue delay. What principle does this illustrate? externalities highest and best use substitution supply and demand3What method is being used when an appraiser estimates the cost of construction by considering the quantity and quality of all materials, as well as all categories of required labor, and unit costs are applied? unit-in-place quantity survey comparative unit cost-index trending2When measuring a commercial office structure, an appraiser identifies the amount of space on which the rent is based. Which measurement is the appraiser using? net rentable area gross building area gross leasable area gross living area1What is the most commonly used cost-estimating method? cost-index trending unit-in-place method quantity survey method comparative unit method