ASC Investment Metrics 2

Question 1

In ARGUS Enterprise, which metric represents the ratio of net operating income to the total acquisition cost of a property?

Accepted Answer

Capitalization Rate (Going-In Cap Rate)

Answer

The going-in cap rate (capitalization rate) divides Year 1 NOI by the total purchase price or acquisition cost.

Question 2

Which ARGUS output measure reflects the total return to an investor including both income and appreciation, expressed as a single annualized percentage?

Accepted Answer

Internal Rate of Return (IRR)

Answer

IRR is the annualized discount rate that sets the NPV of all cash flows (including sale proceeds) to zero, capturing both income and appreciation.

Question 3

A property has a NOI of $850,000 and is sold at a 6.5% terminal cap rate. What is the reversion value?

Accepted Answer

$13,076,923

Answer

$850,000 ÷ 0.065 = $13,076,923, which is the terminal or reversion value.

Question 4

In ARGUS Enterprise, the 'Equity Multiple' of 2.0x means the investor:

Accepted Answer

Doubled their total equity investment over the holding period

Answer

An equity multiple of 2.0x means total distributions returned to the investor equal twice the original equity invested.

Question 5

Which scenario would most likely DECREASE the unleveraged IRR in an ARGUS model?

Accepted Answer

Increasing the residual cap rate assumption

Answer

A higher residual (terminal) cap rate lowers the reversion value, reducing total proceeds and therefore the unleveraged IRR.

(ASC) Argus Software Certification Practice Test

(ASC) Argus Software Certification Practice Test

ASC Investment Metrics 2