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Question:

Return on investment (ROI) comes in the form of profit, while return of investment comes in the form of ____

A depreciation.
explanation

While the return on investment is profit, the return of investment is the recuperation of the investment through depreciation.

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Related Questions

Each unit in a duplex rents for $2,000 per month. With a price of $240,000, the monthly gross multiplier is ____

120.

According to the income approach, $240,000 (value) / $2,000 (rent) = 120.

A property is valued at $300,000 with a 5% capitalization rate (cap rate). If the prospective buyer wants an 8% return on their money, the property’s valued would be ____

$187,500.

The value will move in the opposite direction as the capitalization rate (cap rate).
$300,000 x .05 = $15,000 (net income)
$15,000 ÷ .08 = $187,500

The term “highest and best use” can best be defined as:

the use that creates the greatest net return.

Once again, net results are the most relevant. The maximum productivity that generates the greatest net return is the highest and best use.

To calculate replacement cost, compute the cost to replace ____

an equally desirable property with the same utility value.

A replacement property is to produce a similar level of utility and be as desirable as the subject property.

Which of the following statement regarding capitalization rates is least correct?

Decreasing the risk of loss increases the cap rate.

The capitalization rate (cap rate) is the annual rate of return produced by the operations of an income property. The cap rate is calculated by dividing the net operating income (NOI) by the price asked or offered for income property. Thus, the value moves in the opposite direction of the rate, and a higher risk is rewarded by a higher return.

The first step in the appraisal process is to ____

define the problem.

Like in any similar effort, you must first define what the problem is.

Based on recent comparable sales, an agent’s opinion of a property’s fair market value (FMV) is referred to as a(n) ____

broker price opinion (BPO).

The broker’s price opinion (BPO) is based on comparable sales only.

When a residence has a physical age of 20 years, but the appraiser notes the building has the appearance of being only 10 years old, the appraiser is referring to ____

effective age.

Effective age refers to the 10 year old condition of the property. Actual age is 20 years.

Which of the following is not an example of functional obsolescence ____

proximity of obnoxious nuisances.

Functional obsolescence applies to aspects within the property. External conditions may represent an economic obsolescence.

The vacancy rate of an apartment building under normal competitive conditions is primarily the result of ____

housing supply and demand in the area.

The vacancy level and rental income will fluctuate as supply increases or demand grows or shrinks.

The most common approach used by an appraiser in the appraisal of a single family residence (SFR) is ____

market comparison.

Whenever possible, an appraiser prefers to compare properties.

In using the capitalization process, which of the following cannot be deducted to determine the net income?

Debt service.

Just as finance is not a consideration in appraisal, the debt service would also not apply.

To calculate a capitalization rate (cap rate), the appraiser uses which of the following methods ____

Any of the above.

Any of these can be applied.

Which of the following is not a force that influences value?

Demand.

The forces are: Physical, Economic, Government, and Social (PEGS). Demand is one of the elements of value, not an influence on value.