PRACTICE SET

Mathematics for
Real Estate Appraisers

(Present Value of 1)
Windsor Company will receive
$100,000 in 7 years. If the
appropriate interest rate is 10%, the
present value of the $100,000
receipt is
a. $51,000.
b. $51,316.
c. $151,000.
d. $194,872.

(Present Value of 1)
Windsor Company will receive
$100,000 in 7 years. If the
appropriate interest rate is 10%, the
present value of the $100,000
receipt is
a. $51,000.
b. $51,316.
c. $151,000.
d. $194,872.

(Present Value of Ordinary Annuity)

How much should an investor pay today
to be assured of earning of 6% with an
investment of Php 500,000 per year for 6
years considering a factor of 4.917324?
A) Php 2,016,312
B) Php 1,016,813
C) Php 1,694,688
D) Php 2,458,662

(Present Value of Ordinary Annuity)

How much should an investor pay today
to be assured of earning of 6% with an
investment of Php 500,000 per year for 6
years considering a factor of 4.917324?
A) Php 2,016,312
B) Php 1,016,813
C) Php 1,694,688
D) Php 2,458,662

(Future Value of 1)
At the end of two years, what will be the
balance in a savings account paying 6%
annually if $5,000 is deposited today?
The future value of one at 6% for one
period is 1.06.
a. $5,000
b. $5,300
c. $5,600
d. $5,618

(Future Value of 1)
At the end of two years, what will be the
balance in a savings account paying 6%
annually if $5,000 is deposited today?
The future value of one at 6% for one
period is 1.06.
a. $5,000
b. $5,300
c. $5,600
d. $5,618

(Capitalization Rate)
What is the value of the property that
has a monthly net income of
Php75,000.00 and with an overall
capitalization rate of 9%?

a. Php10,000,000.00
b. Php900,000.00
c. Php1,000,000.00
d. Php833,333.00

(Capitalization Rate)
What is the value of the
property that has a
monthly net income of
Php75,000.00 and with
an overall capitalization
rate of 9%?

a. Php10,000,000.00
b. Php900,000.00
c. Php1,000,000.00
d. Php833,333.00

75,000/.09=
833,333

(Market Comparison Approach)

An appraisal is to be made for a three bedroom
house. One comparable with two bedrooms is sold
for Php5,000,000.00. The appraiser makes an
adjustment of Php500,000.00 to the comparable to
account for the difference in the number of
bedrooms. The adjusted sales price of the
comparable is:
a.
b.
c.
d.

Php5,500,000.00
Php4,500,000.00
Php6,000,000.00
Php6,500,000.00

(Market Comparison Approach)

An appraisal is to be made for a
three bedroom house. One
comparable with two bedrooms
is sold for Php5,000,000.00. The
appraiser makes an adjustment
of Php500,000.00 to the
comparable to account for the
difference in the number of
bedrooms. The adjusted sales
price of the comparable is:
a. Php5,500,000.00
b. Php4,500,000.00
c. Php6,000,000.00
d. Php6,500,000.00

(Effective Rental Rate)

In a soft market, a landlord accepted a new
tenant with 60-month lease at Php10,000.00
per month but gave the new tenant six
months rent free. Using the average rent
method, what is the effective monthly rent?

a.
b.
c.
d.

Php9,090.90
Php10,000.00
Php9,000.00
Php9,909.00

(Effective Rental Rate)

In a soft market, a landlord
accepted a new tenant with
60-month lease at
Php10,000.00 per month but
gave the new tenant six
months rent free. Using the
average rent method, what is
the effective monthly rent?

a. Php9,090.90
b. Php10,000.00
c. Php9,000.00
d. Php9,909.00

(Market Comparison Approach)

If the subject property is 10% superior to
a comparable property which was sold for
Php1,000,000.00, what would be the
indicated value of the subject property?

a. Php1,000,000 x 1.10 = Php1,100,000.00

b. Php1,000,000 x 0.90 = Php900,000.00
c. Php1,000,000 / 1.10 = Php909,090.00
d. Php1,000,000 / 0.90 = Php1,111,111.00

(Market Comparison Approach)

If the subject property is 10% superior
to a comparable property which was sold
for Php1,000,000.00, what would be the
indicated value of the subject property?

a. Php1,000,000 x 1.10 =
Php1,100,000.00
b. Php1,000,000 x 0.90 = Php900,000.00
c. Php1,000,000 / 1.10 = Php909,090.00
d. Php1,000,000 / 0.90 = Php1,111,111.00


(Capitalization Rate)

Using residual capitalization approach,

what is the value of an improved
property with a net income of
Php800,000.00 a year, an interest rate of
8% and a recapture rate of 2%?

a.
b.
c.
d.

Php8,000,000.00
Php10,000,000.00
Php8,640,000.00
Php8,160,000.00

(Capitalization Rate)
Using residual capitalization
approach, what is the value
of an improved property
with a net income of
Php800,000.00 a year, an
interest rate of 8% and a
recapture rate of 2%?

a. Php8,000,000.00
b. Php10,000,000.00
c. Php8,640,000.00
d. Php8,160,000.00

800,000/.10=
8,000,000

(Percentage)
If houses in your area have increase in value
by 9% during the past year and the average
price of houses sold last year was
Php950,000.00. What is the average price of
houses sold today?

a. Php1,035,500.00
b. Php1,015,000.00
c. Php1,010,000.00
d. Php1,030,000.00

(Percentage)
If houses in your area
have increase in value by
9% during the past year
and the average price of
houses sold last year was
Php950,000.00. What is
the average price of
houses sold today?

a. Php1,035,500.00
b. Php1,015,000.00
c. Php1,010,000.00
d. Php1,030,000.00

(Percentage)
The appropriate adjustment for time is
determined to be 8% per year. What is the
adjusted value of a comparable property that
was sold a year ago for Php50,000 per
square meter?

a.
b.
c.
d.

Php46,000.00
Php54,000.00
Php62,500.00
Php55,000.00

per
per
per
per

square
square
square
square

meter
meter
meter
meter

(Percentage)
The appropriate adjustment for
time is determined to be 8% per
year. What is the adjusted value
of a comparable property that
was sold a year ago for
Php50,000 per square meter?

a. Php46,000.00 per square

meter
b. Php54,000.00 per square meter
c. Php62,500.00 per square meter
d. Php55,000.00 per square meter

(Percentage)
A house and lot is priced at
Php9,500,000.00. The lot alone is valued at
Php1,781,250.00. What percentage of the
total asking price is attributed to the value of
the lot?

a.
b.
c.
d.

18.75%
18.25%
19.25%
19.75%

(Percentage)
A house and lot is priced
at Php9,500,000.00. The
lot alone is valued at
Php1,781,250.00. What
percentage of the total
asking price is attributed
to the value of the lot?

a. 18.75%
b. 18.25%
c. 19.25%
d. 19.75%

(Assessment)
The annual property tax on parcel of land you
are appraising is Php10,000.00. The tax
authority assesses land at 50% of market value.
If the tax rate is 2% of the assess value. What is
the estimated market value of the land?

a.
b.
c.
d.

Php1,000,000.00
Php100,000.00
Php10,000,000.00
Php500,000.00

(Assessment)
The annual property tax on
parcel of land you are
appraising is Php10,000.00.
The tax authority assesses
land at 50% of market value. If
the tax rate is 2% of the assess
value. What is the estimated
market value of the land?

a. Php1,000,000.00
b. Php100,000.00
c. Php10,000,000.00
d. Php500,000.00

(Capitalization Rate)
If a propertys annual net income is
Php240,000.00 and it is valued at
Php3,000,000.00. What is its
capitalization rate?

a. 8%
b. 9%
c. 8.5%
d. 10%

(Capitalization Rate)
If a propertys annual
net income is
Php240,000.00 and it
is valued at
Php3,000,000.00.
What is its
capitalization rate?

a. 8%
b. 9%
c. 8.5%
d. 10%


(Ratio)

If a propertys net income ratio is

0.78, what is its operating expense
ratio?

a.
b.
c.
d.

0.22
2.2
22
0.022


(Ratio)

If a propertys net income

ratio is 0.78, what is its
operating expense ratio?

a. 0.22
b. 2.2
c. 22
d. 0.022

(Gross Rent Multiplier)

A commercial property producing an annual
income of Php415,000.00 was sold a
month ago for Php9,233,750.00. What is
the propertys gross multiplier effect?
a.
b.
c.
d.

22.25
25.25
2.25
222.5

(Gross Rent Multiplier)

A commercial property
producing an annual
income of Php415,000.00
was sold a month ago for
Php9,233,750.00. What is
the propertys gross
multiplier effect?
a. 22.25
b. 25.25
c. 2.25
d. 222.5

(Capitalization Rate)
A property with an annual net income of Php382,500.00
was recently sold for Php4,250,000.00. The remaining
economic life of the building is estimated to be 25
years. Land value is estimated to be Php900,000.00
Based on the data gathered.

The overall rate of the property is:

a. 9%
b. 10%
c. 8%
d. 11%

(Capitalization Rate)
A property with an annual net
income of Php382,500.00 was
recently sold for
Php4,250,000.00.
The remaining economic life of
the building is estimated to be
25 years. Land value is
estimated to be Php900,000.00
Based on the data gathered.

The overall rate of the property

is:

a.9%
b. 10%
c. 8%
d. 11%

(Percentage)
A property with an annual net income of
Php382,500.00 was recently sold for
Php4,250,000.00. The remaining economic life of the
building is estimated to be 25 years. Land value is
estimated to be Php900,000.00 Based on the data
gathered.
The value of the building is:
a.
b.
c.
d.

3,350,000.00
3,450,000.00
3,250,000.00
3,500,000.00

(Capitalization Rate)
A property with an annual net
income of Php382,500.00
was recently sold for
Php4,250,000.00.
The remaining economic life
of the building is estimated
to be 25 years. Land value is
estimated to be
Php900,000.00 Based on the
data gathered.

The value of the building is:

a.
b.
c.
d.

3,350,000.00
3,450,000.00
3,250,000.00
3,500,000.00

(Ratio)
A property with an annual net income of Php382,500.00
was recently sold for Php4,250,000.00. The remaining
economic life of the building is estimated to be 25
years. Land value is estimated to be Php900,000.00
Based on the data gathered.

Ratio of the building to total value is:

a. 78.82%
b. 68.82%
c. 88.82%
d. 72.88%

(Ratio)
A property with an annual net
income of Php382,500.00 was
recently sold for Php4,250,000.00.
The remaining economic life of the
building is estimated to be 25
years. Land value is estimated to
be Php900,000.00 Based on the
data gathered.

Ratio of the building to total value is:

a. 78.82%
b. 68.82%
c. 88.82%
d. 72.88%

Prepared by:
Ms. Edita Mara Lacsamana,
CPA, REB
Contact details:
editalacsamana@gmail.com
0906.931.8567
National University
College of Business
Administration
Assistant Professor 3