## CRE Pop Quiz Answers

**Here are the answers from the previous week, did you get them right?**

**1). What is ROI?**

**A:****Return on investment**, or

**ROI**, is the most common profitability ratio. There are several ways to determine

**ROI**, but the most frequently used method is to divide net profit by total assets. So if your net profit is $100,000 and your total assets are $300,000, your

**ROI**would be .33 or 33 percent.

**2). What is cash flow?**

*A:***Cash Flow,**is the net cash received in any period, taking into account net operating income, debt service, capital expenses, loan proceeds, sale revenues, and any other sources and uses of cash.

**3). What is cap rate?**

*A:***Capitalization rate,**a percentage that relates the value of an income-producing property to its future income, expressed as net operating income divided by purchase price. Also referred to as cap rate.

**4). What is EV?**

**, the sum of the weighted averages of all possible outcomes of a probability distribution. Probability distribution is the collection of all possible outcomes for an event and their corresponding probabilities of occurrence. The probabilities of occurrence for each possible outcome are used as the weights. The sum of each possible value multiplied by its probability of occurrence equals the EV of the outcome. EVs can be calculated for any type of outcome the investor chooses to analyze: net operating incomes, after-tax cash flows, and rates of return (IRRs).**

*A:*Expected value (EV)**5). What is FV?**

**, the amount to which money grows over a designated period of time at a specified rate of interest.**

*A:*Future value (FV)**6). What is NOI?**

**, the potential rental income plus other income, less vacancy, credit losses, and operating expenses.**

*A:*Net operating income (NOI)

**Answer all the question correctly and you could win a Buy The Block Not The Bar Tote Bag.**