Question 1
If you borrow $1000 from a local bank, the interest you should pay depends on:
A. Interest rate
B. Length of time that I borrow the money
C. Both of the above
D. None of the above
Question 2
How much interest will you get from your $1000 deposit after 1 year if effective interest rate is 10% per year?
A. $100
B. $15
C. $50
D. $20
Question 3
A deposit of $2000 is made in a bank account that pays 10% interest compounded annually. Approximately how much money will be in the account after 3 years?
A. $2200
B. $2000
C. $2662
D. $2420
Question 4
The annual nominal interest rate is 10%; what is annual effective interest rate if compound monthly?
A. 12%
B. 12.68%
C. 10%
D. 10.47%
Question 5
If a project’s projected return rate equals to my MARR, should you invest that project?
A. No, it is not profitable.
B. No, it might be not profitable.
C. Yes, it meets my MARR.
D. Yes, only if I have no other better solution.
Question 6
What is the future value of a present value $100 after a period of 12 month, given nominal annual interest rate equals to 10%?
A. $101
B. $110
C. $100.83
D. $110.47
Question 7
What is the present value of a monthly payment of $968, given nominal annual interest rate equals to 10%, and the length of time equals to 2 months?
A. $968
B. $960
C. $952.97
D. $718
Question 8
Please calculate the one year simple interest and monthly compounded interest for a $1000 loan borrowed at 10% annual rate.
A. $1100, $1110
B. $100, $110
C. $1100, $1104.71
D. $100, $104.71
Question 9
What is future value of 6 consecutive uniform monthly payments of $1,000, given monthly interest rate is 10%?
A. $6000
B. $7000
C. $10621.37
D. $7715.51
Question 10
If A = $1000, i = 10%, n = 3, which statement below is NOT correct?
A. P = $2486.85
B. F = $3310
C. This cash flow fits uniform series model.
D. i is a nominal interest rate
Question 11
Given identical annual interest rate in exactly same scenarios, compare methods of computing simple interest and compounded interest:
A. Simple interest is higher
B. Compounded interest is higher
C. They are the same
D. Before comparing, the length of interest period should be taken into consideration
Question 12
Please use equations of uniform series to calculate P, given A = 2000, i = 10%, n = 10.
A. P = 10000
B. P = 12000
C. P = 12289
D. P = 12391
Question 13
Which interest rate is higher in monthly compounded interest? 1% monthly rate and 12% annual rate.
A. 1% monthly rate is higher
B. 12% annual rate is higher
C. They are the same
D. Cannot be determined
Question 14
Please use equations of uniform series to calculate A, given P = 10000, i = 12%, n = 12.
A. A = 1412
B. A = 1513
C. A = 1614
D. A = 1715
Question 15
Please calculate NPV of a $2,000 income after 3 years, given MARR = 10%:
A. $2,000
B. $1,818.18
C. $1,652.89
D. $1,502.63
Question 16
If NPV = 0, please compare IRR and MARR:
A. IRR > MARR
B. IRR = MARR
C. IRR < MARR
D. Cannot be determined
WEEK2
Question 1
What does the REIT stand for?
A. Real Equity Investment Trust
B. Real Estate Interest Trust
C. Real Equity Interest Trust
D. Real Estate Investment Trust
Question 2
Which of the following phase is NOT part of the project life-cycle?
A. Design
B. Construction
C. Operation
D. None of the above
Question 3
Which of the below software is better suited for building a real estate financial model?
A. Word
B. Excel
C. Powerpoint
Question 4
Which of the following is a parameter of zoning code?
A. Max building height
B. Max number of units allowed
C. Building setbacks
D. All of the above
Question 5
Which of the followings is not a required element in calculating NOI?
A. Cash revenue
B. Debt services expenditure
C. Cash operating Expense
D. Maintenance Capital Expenditure
Question 6
Which of the following is NOT a method for estimating sales price?
A. Comparable properties
B. Cap rate
C. Discounted Cash Flow
D. None of the above
Question 7
Which of the following details can be used to improve feasibility study?
A. Timing of cash flow
B. Financing Structure
C. Time value of cash
D. All above
Question 8
What does the NOI stands for?
A. Net Operating Income
B. Net Operation Index
C. New Operation Index
D. New Operation Income
Question 9
What can you get from using discounted cash flow to evaluate a project?
A. How much a potential project will add to my wealth
B. How much a potential investment is worth to them
C. Both above
D. None of the above
Question 10
Calculating NPV is discounting cash flow to T = ?
A. 0
B. 1
C. 2
D. 3
Question 11
If NPV = 0, IRR is equal to?
A. Interest rate
B. Discount rate
C. Prime rate
D. None of the above
Question 12
If quarterly compounded interest rate is 12%, how much is the EAIR
A. 46%
B. 48%
C. 50%
D. 57%
WEEK 3
Question 1
Which of the followings is a method of risk analysis?
A. Scenario Analysis
B. Probability-weighted Scenarios
C. Monte-Carlo Simulation
D. All above
Question 2
Drawbacks of financial leverage include:
A. Increases risk of bankruptcy
B. Reduce flexibility
C. Additional supervision from lender
D. All above
Question 3
Which of the followings is ineligible development cost?
A. Attorney’s fee
B. Permit fee
C. Contingency cost
D. All above
Question 4
Who are typical construction lenders?
A. Local banks and S&L’s
B. National Real-Estate Development Lenders
C. Crowdfunding
D. All above
Question 5
Which of the following statements on Purchase Commitment is WRONG?
A. Lender require the developer obtain a commitment-to-purchase agreement from future operating owner
B. It brings higher probability that completed building will be sold
C. It does not require minimum percentage to be rented
D. None of the above
Question 6
Which index does the sponsor care about most?
A. NPV
B. IRR
C. Cap rate
D. None of the above
Question 7
A. Decision tree method is based on:
B. Probability
C. Matrix
D. Arithmetic
E. None of the above
Question 8
What is the key factor to be observed in decision trees?
A. The optimistic terminal branch
B. The least optimistic terminal branch
C. Expected value
D. None of the above
Question 9
What does negative expected value mean?
A. The project should proceed
B. The project should not proceed
C. The project should proceed if IRR is positive
D. None of the above
Question 10
What happens to a decision tree after the time value is taken into consideration?
A. Probability distribution at each node will change
B. Probability of each terminal branch will change
C. Expected value will change
D. None of the above
WEEK 4
PART I
Question 1
Which of the following is the most important factor in Project Finance:
A. Cash flow
B. Good management
C. Strong sponsor
D. Asset base
Question 2
A project financing should always have:
A. A convertible currency
B. An offtaker
C. A sponsor guarantee
D. A stand-alone special purpose legal entity
Question 3
Who is not a stakeholder in project financing?
A. Ratings agencies
B. Local populations
C. Lawyers
D. None of the above
Question 4
What Principles do project financiers use to adjudicate environmental issues?
A. Greenwich
B. Beale
C. Equator
D. Latitude
Question 5
What risk do project financiers seek to avoid?
A. Currency risk
B. Principal risk
C. Price risk
D. Sovereign risk
Question 6
An EPC contract does what
A. Finances a project
B. Builds a project
C. Names a project
D. Operates a project
Question 7
O&M contractors should
A. Be independent of a project
B. Operate a project
C. Be known to the Sponsors
D. Charge a lot
Question 8
The largest source of project finance is:
A. Sponsors
B. Governments
C. Banks
D. Insurance companies
Question 9
Which of the following would not generally be covered by an insurance agreement:
A. Bad weather
B. Strikes
C. Bankruptcy
D. Price risk
Question 10
A completion agreement should include:
A. Economic completion
B. Physical and economic completion
C. Financial completion
D. Physical completion
PART II
Question 1
Which of the following is NOT a project party?
A. Investor
B. Contractor
C. Operator
D. Consumer
Question 2
What is an investor’s typical role in a project?
A. Regulator
B. Technical adviser
C. Source of equity investment
D. Loan lender
Question 3
Which of the following may make cost surpass revenue?
A. Reliable management
B. Deflation
C. Excess supply in material market
D. Risk
Question 4
Which of the following is an uncertain variable to investors?
A. Overall final exposure
B. Average life of debt
C. Gross interest margin and fee
D. All above
Question 5
Which kind of risk is owner’s liability typically?
A. Final cost
B. Demand for development
C. Extended schedule
D. All above
Question 6
Which kind of risk may be contractor’s liability?
A. Quality
B. Operation cost
C. Changes after award
D. All above
WEEK 5
PART I
Question 1
P3 involves a long-term contractual partnership among:
A. Government or quasi-governmental entities
B. Private equity investors
C. Construction firms
D. More than the above entities
Question 2
Which of the following is NOT a property of P3?
A. P3 is a non-traditional project delivery method
B. P3 requires a bankable long-term repayment stream
C. P3 transfers major project risk from public to private sector
D. Asset reverts to public sector when it has no value
Question 3
Which of the following kind of project P3 CANNOT be applied?
A. Hospital
B. Toll road
C. Renewable energy plant
D. Military facility
Question 4
Which of the following statements is correct?
A. P3 applies on greenfield projects only
B. P3 applies on brownfield projects only
C. Government remains in firm control of a P3 project
D. P3 has never been used in any country except the US
Question 5
Which of the following is a driver of applying P3?
A. Lack of public funding
B. Economic growth
C. P3 leads to improved NPV over traditional approaches
D. All above
Question 6
Which of the following is the key role in a typical P3 structure?
A. Government
B. Special purpose company
C. Customer/Users
D. Lenders
Question 7
Which kind of risk may be government’s liability in DBF P3 structure?
A. Design
B. Construction
C. Operation
D. Finance
Question 8
Which of the following is a property of the Market Risk Compensation Model?
A. Credit and payback risk is low
B. 5 – 10 % investment is equity
C. Mostly used in Europe
D. None of the above
Question 9
Why P3 is gaining traction in the US?
A. Debt limit is being reached
B. P3 takes advantage of innovation
C. Growing support of user-based tolls over new taxes
D. All above
Question 10
Which of the following is NOT a success factor of P3?
A. Partnership mindset
B. Strong governmental support
C. Federal fund support
D. Support of populace
Question 11
Which of the following is NOT a benefit to government?
A. Financial benefit from operation
B. Faster delivery to the public
C. New infrastructure build for improved life quality
D. P3 projects do not rely on tax revenue
Question 12
Which of the following is not a reason why P3 is trending?
A. Less political
B. P3’s value being proven
C. Bigger project coming to market
D. Private sector is lack of funding
