QUESTION 1

The appropriate decision rule when calculating the NPV for the equity investor is that if the number is a positive it is a good investment.

1. True
2. False

QUESTION 2

Investors should calculate the profitability of an investment on a before-tax basis, since tax rates differ from investor to investor.

1. True
2. False

QUESTION 3

A lower cap rate means the borrower can expect to make most of their returns on the sale of the property as opposed to a higher cap rate which indicates that the bulk of the returns will be made from the yearly cash flows.

1. True
2. False

QUESTION 4

Calculating the NPV using the WACC produces a yield in terms of a percentage for the equity investor.

1. True
2. False