HCCP Financial Analysis 3

Question 1

A developer underwrites replacement reserves at $350 per unit per year for a 50-unit LIHTC project. What is the annual reserve deposit?

Accepted Answer

$17,500

Answer

$15,000

Answer

$35,000

Answer

$70,000

Question 2

Which of the following best describes 'credit pricing' in a tax credit transaction?

Accepted Answer

The cents-per-dollar investors pay for each dollar of tax credit

Answer

The interest rate applied to the construction loan

Answer

The applicable percentage used to calculate credits

Answer

The per-unit cost cap set by the state agency

Question 3

When analyzing a LIHTC permanent loan, an underwriter typically requires that the DSCR not fall below which minimum threshold?

Accepted Answer

1.15

Answer

1.00

Answer

1.05

Answer

1.25

Question 4

In a tax credit financial model, 'syndication costs' are classified under which category?

Accepted Answer

Soft costs

Answer

Hard costs

Answer

Acquisition costs

Answer

Operating expenses

Question 5

A LIHTC project generates $10,000 in annual tax credits for 10 years. At a credit price of $0.92, what is the approximate equity raised?

Accepted Answer

$92,000

Answer

$82,000

Answer

$100,000

Answer

$110,000

Question 6

Which financial metric measures the percentage of effective gross income consumed by operating expenses, excluding debt service?

Accepted Answer

Operating expense ratio

Answer

Loan-to-value ratio

Answer

Debt service coverage ratio

Answer

Net income multiplier

Question 7

In LIHTC underwriting, 'net equity proceeds' represent which of the following?

Accepted Answer

Investor equity paid into the deal minus syndication costs

Answer

Total tax credits allocated over the compliance period

Answer

Net operating income after all operating expenses

Answer

Gross development cost minus the permanent loan