ASC Investment Metrics 4

Question 1

In ARGUS Enterprise, the 'Gross Rent Multiplier' (GRM) is defined as:

Accepted Answer

Purchase price divided by annual gross potential rent

Answer

NOI divided by purchase price

Answer

Annual gross rent divided by operating expenses

Answer

Effective gross income divided by debt service

Question 2

Which ARGUS metric measures the percentage of a property's gross potential income that must be collected just to break even on operating expenses and debt service?

Accepted Answer

Break-Even Occupancy Ratio

Answer

Debt Yield

Answer

Equity Dividend Rate

Answer

Expense Ratio

Question 3

In ARGUS Enterprise, 'cash-on-cash return' differs from 'IRR' primarily because cash-on-cash:

Accepted Answer

Measures only the current year's cash flow relative to equity invested

Answer

Accounts for the time value of money

Answer

Includes reversion proceeds in the calculation

Answer

Adjusts for depreciation and amortization

Question 4

If a property's NOI grows at 3% annually and the terminal cap rate equals the going-in cap rate, the property's value at sale will:

Accepted Answer

Increase proportionally with NOI growth

Answer

Remain the same as the purchase price

Answer

Decrease due to cap rate compression

Answer

Be impossible to determine without leverage details

Question 5

Which ARGUS Enterprise report best isolates the impact of leasing assumptions (rent, term, TI allowances) on total investment returns?

Accepted Answer

Lease-by-Lease Cash Flow Report

Answer

Debt Schedule Report

Answer

Property Summary Report

Answer

Operating Expense Detail Report

Question 6

A property is acquired at a 6.0% cap rate and sold five years later at a 5.5% cap rate. This cap rate compression:

Accepted Answer

Increases the reversion value above what NOI growth alone would produce

Answer

Reduces the reversion value below the acquisition price

Answer

Has no effect on IRR if NOI is unchanged

Answer

Decreases the equity multiple

Question 7

In ARGUS Enterprise, the 'Expense Ratio' is defined as:

Accepted Answer

Total operating expenses divided by effective gross income

Answer

Total debt service divided by gross potential income

Answer

Capital expenditures divided by NOI

Answer

Operating expenses divided by total acquisition cost