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CNRPA TEST ANSWERS
A.) 9%MINIMUM RETURN TO SATISFY BOTH THE LENDER
B.) $2,108,800.00 WHAT YOU PAID FOR THE BUILDING
$105,440.00 COST PER UNIT
$98.54 COST PER SF
C.) $262,616.92 NOI AT THE END OF YEAR 10
D.) $4,376,948.71 HOW MUCH YOU SOLD THE BUILDING FOR
$218,847.44 COST PER UNIT
$204.53 COST PER SF
11.38GRM
E.) 21.94%IRR AT SALE
F.) $2,546,675.50 WHAT YOU COULD PAY FOR THE BUILDING IF 15%
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AND THE BUYER
IRR WAS REQUIRED
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BAND OF INVESTMENT ANALYSIS
Position Interest Percent x Rate of Return = Requirement
Equity "Buyer" 0.25 x 0.14 = 0.03
Lender 0.75 x 0.08 = 0.06
Total 0.09
Answer: 9% to satisfy both the lender and the buyer.
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Property Address
Description/Property Type 20 Unit Apartment Building
City Culver City
Rating/Quality (Bldg and Location) B/B
Age 1978
Number of Units 20Square Feet 21400
Average Sq. Ft. Per Unit 1070
Bedrooms 40
Bathrooms 40
Unit Mix/Rent Roll Number of Units
One Bedrooms 0
Two Bedrooms 20
Laundry 20
Price $2,373,333.33
Down $830,666.67
Loan $1,542,666.67
Gross Rent Multiplier 9.57
Cost Per Unit(CPU) $118,666.67
Cost Per Sqare Foot $110.90
CAP RATE 7.50%
Gross Scheduled Income(GSI) $248,000.00
Vacancy $0.00
Gross Operating Income(GOI) $248,000.00
Expenses ($70,000.00)
Net Operating Income(NOI) $178,000.00
Debt Service ($117,008.43)
Cash Flow $60,991.57
Cash on Cash 7.34%
ROI 7.34%
Aggregate IRR
IRR(Divided by the time investment held)
Year 10 Year Income
1 $248,000.00
2 $260,400.00
3 $273,420.00
4 $287,091.00
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5 $301,445.55
6 $316,517.83
7 $332,343.72
8 $348,960.90
9 $366,408.95
10 $384,729.40
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Net Rentable @93% Average Unit Size
19902 995.1x 93%
Rent Sq. Ft. Rent/Sq.Ft./Month
$1,000.00 995.10 $1.00
$33.33
35%
65%
(PFA TEST)plucked from air
0%
($3,500)
Vacancy GOI Expenses
$0.00 $248,000.00 ($70,000.00)
$0.00 $260,400.00 ($72,100.00)
$0.00 $273,420.00 ($74,263.00)
$0.00 $287,091.00 ($76,490.89)
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$0.00 $301,445.55 ($78,785.62)
$0.00 $316,517.83 ($81,149.19)
$0.00 $332,343.72 ($83,583.66)
$0.00 $348,960.90 ($86,091.17)
$0.00 $366,408.95 ($88,673.91)
$0.00 $384,729.40 ($91,334.12)
NPV Calculation: The Formula looks like "=NP
Remember to start your formula with an "=" si
The equal sign tells Excel that you are going t
The name next to the equals sign tells Excel wFor instance, if you are looking for Net Present
If you are looking for Internal Rate of Return y
After you have named the formula, Excel will
The arguments begin when you insert an open
An Argument are the values that Excel will us
Excel is very smart and tries to make it as eas
It will give you a little cheat sheet at the bott
The argument ends with the close of a parent
Excel to make it's calcuations. By way of exa
of return and the cash flows for each year asclosing the parenthesis, you will tell Excel to al
and to use the down payment as the basis of
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Monthly Income Per Unit Annual Income Per Unit
$- $-
$20,000.00 $240,000.00
$666.67 $8,000.00
Total Annual Income $248,000.00
Cash Flow
NOI Loan $(830,666.67)
$178,000.00 ($117,008.43) $60,991.57
$188,300.00 ($117,008.43) $71,291.57
$199,157.00 ($117,008.43) $82,148.57
$210,600.11 ($117,008.43) $93,591.68
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$222,659.93 ($117,008.43) $105,651.50
$235,368.64 ($117,008.43) $118,360.21
$248,760.06 ($117,008.43) $131,751.63
$262,869.73 ($117,008.43) $145,861.30
$277,735.04 ($117,008.43) $160,726.61
$293,395.27 ($117,008.43) $3,440,649.75
21.81%
(15%,I57:I67)+I56"
ign
write a formula
hat type of formula you are writingValue your formula would be =NPV
ur formula would be =IRR
sk you for your arguments
parenthesis. Each argument is separated by a comma.
in the formula to calculate your answer
for you as possible to write your formulas.
m of each formula to give you hints as to what to insert into the cell
esis. But you can still add additional information to allow
ple - when you are calculating the NPV you will provide the target rate
our arguments. Then after you close your argument bylso take into consideration that you invested funds as a down payment
the return you are receiving.
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Sale Proceeds
$4,889,921.24 Sale @ 6% CAP
$(1,307,813.46)Loan Repayment
$(317,844.88)Sale Cost
$3,264,262.90 Sale Proceeds
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Upon Sale:
$244,496.06 Cost Per Unit
$228.50 Cost Per Sqare Foot
12.71 Gross Rent Multiplier
NPV Calculation
$(830,666.67)
$60,991.57
$71,291.57$82,148.57
$93,591.68
$105,651.50
$118,360.21
$131,751.63
$145,861.30
$160,726.61
$3,440,649.75
15% Insert Target IRR to the Left
$480,876.53
$2,854,209.86
This is how much more or less thebuyer can pay to achieve theirtarget IRR. This amount will beadded to the original purchaseprice to tell you know how muchyou should pay for the property toachieve your target return
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Property Address
Description/Property Type 20 Unit Apartment Building
City Culver City
Rating/Quality (Bldg and Location) B/B
Age 1978 Net Rentable @93% Average Unit Size
Number of Units 20 19902 995.1
Square Feet 21400x 93%
Average Sq. Ft. Per Unit 1070
Bedrooms 40
Bathrooms 40
Unit Mix/Rent Roll Number of Units Rent Sq. Ft. Rent/Sq.Ft./Month
One Bedrooms 0
Two Bedrooms 20 $1,000.00 995.10 $1.00
Laundry 20 $33.33
Price $2,108,800.00
Down $738,080.00 35%
Loan $1,370,720.00 65%Gross Rent Multiplier 8.50
Cost Per Unit(CPU) $105,440.00
Cost Per Sqare Foot $98.54
CAP RATE 7.50%(PFA TEST)plucked from air
Gross Scheduled Income(GSI) $248,000.00
Vacancy ($19,840.00) 8%
Gross Operating Income(GOI) $228,160.00
Expenses ($70,000.00) ($3,500)
Net Operating Income(NOI) $158,160.00
Debt Service ($103,966.59)
Cash Flow $54,193.41
Cash on Cash 7.34%
ROI 7.34%
Aggregate IRRIRR(Divided by the time investment held)
Year 10 Year Income Vacancy GOI Expenses NOI
1 $248,000.00 ($19,840.00) $228,160.00 ($70,000.00) $158,1602 $260,400.00 ($20,832.00) $239,568.00 ($72,100.00) $167,468
3 $273,420.00 ($21,873.60) $251,546.40 ($74,263.00) $177,2834 $287,091.00 ($22,967.28) $264,123.72 ($76,490.89) $187,632
5 $301,445.55 ($24,115.64) $277,329.91 ($78,785.62) $198,544
6 $316,517.83 ($25,321.43) $291,196.40 ($81,149.19) $210,0477 $332,343.72 ($26,587.50) $305,756.22 ($83,583.66) $222,172
8 $348,960.90 ($27,916.87) $321,044.03 ($86,091.17) $234,9529 $366,408.95 ($29,312.72) $337,096.23 ($88,673.91) $248,422
10 $384,729.40 ($30,778.35) $353,951.05 ($91,334.12) $262,616
$(1,175,955
$54,193$63,501
$73,316
$83,666$94,577
$106,080$118,205
$130,986$144,455
$3,089,053
1
Buyer can pay $2,546,675