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

GRM = Purchase Price ÷ Annual Gross Potential Rent; it is a quick screening metric that ignores expenses and vacancy.

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

The Break-Even Occupancy Ratio = (Operating Expenses + Debt Service) ÷ Gross Potential Income, showing the minimum occupancy needed to cover all cash obligations.

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

Cash-on-cash return = Current Year Before-Tax Cash Flow ÷ Equity Invested; it measures a single year's income return without considering future cash flows or the sale.

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

When terminal cap rate = going-in cap rate, value = NOI ÷ cap rate; since NOI grows at 3%, the value also grows at 3% annually.

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

The Lease-by-Lease Cash Flow Report breaks out each tenant's contribution — rent, concessions, and TI — allowing direct analysis of leasing assumption impacts on returns.

(ASC) Argus Software Certification Practice Test

(ASC) Argus Software Certification Practice Test

ASC Investment Metrics 4