PVAI.

ORG COURSE
ON LINE EXAMINATION
QUSTION BANK FOR REAL ESTATE VALUATION
F.M. – 50
I) MULTIPLE CHOICE TYPE (MCQ) QUESTION Quantity 10 x 2 marks = 20 Marks
To be attempted 20 MCQ
Answer the right option and mark tick from the following options:
Q.1. “Prices is the monetary value placed upon goods or services offered in the market.”
A. Yes
B. No
C. May be
D. May not be
Q.2. “The cost is the value actually paid for goods or services.”
A. Yes
B. No
C. May be
D. May not be
Q.3. “The economic concept of value reflects a market anticipation of the future benefit
which accrue to the one who owns the goods or receives the services.”
A. Yes
B. No
C. Same as cost concept
D. None of the above
Q.4. An “Estimate” is the closest magnitude of anything which can be determined by
undertaking an exercise based on scientific principles and sound judgement.
A. No
B. Yes
C. It is outright approximation
D. It is guesswork
Q.5. ‘Cost of construction’ is an approximation approaching guesswork of the amount of
money that may have been spent during a specified period of construction.
A. Yes
B. No
C. Might be
 D. None of the above
Q.6. “The selection of the applicable standard of value is determined largely not basically
on the basis of the use to which the valuation is to be part, but absolutely on the rights
and interest which is embodied within the property.”
A. Yes
B. No
C. May be
D. May not be
E. None of the above
Q.7. “Market value is the estimated amount for which an asset should exchange on the
date of valuation between a willing buyer and a willing seller in an arms length transaction
after proper marketing wherein the parties had each acted knowledgeably, prudently and
without compulsion.”
A. It is as per the definition of Institution of Valuers (India).
B. It is as per the definition of R.I.C.S. (U.K.)
C. It is as per the definition of International Assets Valuation Standards committee.
D. It is as per the definition of Institution of Surveyor’s (India).
Q.8. Investment Value means a value based on expected earnings or monetary return to
an investor.
A) Yes
B) No
C) It is estimated price that is ought to be
D) It is Present Worth for further benefits.
E) None of the above.
Q.9. “Going concern value relates to a running business”. It is not a standard of value as
fair market value…………………………………
A) This statement is correct
B) This statement is wrong
C) May be correct
D) May not be correct
E) None
Q.10. “Value-in –use includes elements of personality, such as, machinery, plants,
equipments, chattals etc. and also encompasses concepts of deprival of use, etc. According
to the International Assets Valuation Standard Committee Value-in-use is responsive to
 market price through comparative on investment and/or capitalization approaches based
on market and/or business industry/trade.
A) This statement is partially correct
B)This statement is partially incorrect
C) This statement is fully correct
D) This statement is fully wrong
E) None of the above
Q-11. “Highest and Best Use” means the most accurate use of an asset which is physically
possible approximately justified, legally permissible, financially feasible, and which results
in the highest value.
A) Yes
B) B) No
C) C) partially correct
D) D) Partially wrong
E) E) None of the above.
Q-12. “Liquidation value” may be defined as a Value or an amount that can be realized if
the assets of a concern are sold under forced circumstances. It is also the amount that may
realized by the purchase of an enterprise or dissolution.
A) The statement is correct
B) The statement is wrong
C) The statement is partially correct
D) None of the above
Q-13. “Salvage Value” is the amount that is to be realized on sale of property on a portion
of the property which has been separated from the property because that component is
no longer useful. The term “Salvage Value” normally applied to a dismantled building and
machinery and is also applicable to land.
A) The statement is correct
B) The statement is wrong
C) The statement is partially incorrect
D) None of the above.
Q-14. The term “Fee Simple” defines absolute Ownership of land/ is real property.
A) Yes
B) No
C) Partially incorrect
 D) None of the above.
Q-15. Life estate is one in which property is conveyed to a person only for the term of his/her life.
After the death of the life tenant, the property may, according to the deed of conveyance will,
revert to some other person. This implies that the life tenant has control of the property or state
only till death.
A) Totally correct
B) B) Partially correct
C) C) Fully wrong
D) D) None of the above.
Q-16. When an owner of an immovable property mortgage his/her property, as primary collateral
security against loan, another property interest is created. The, owner of the property as borrower
becomes the ‘mortgagor’ and the lender the ‘mortgagee’.
A) The statement is partially correct
B) The statement is partially incorrect
C) The statement is fully correct
D) The statement is fully incorrect.

Q-17. Easements require the use of someone else’s land having obtaining the title deed . The
owner of the adjacent premises may use the land owned by his neighbour on a temporary or
permanent basis . Easement is a license granted by a land owner to someone for a specific
purpose
A) The Statement is fully correct
B) The Statement is partially correct
C) The Statement is fully wrong
D) None of the above.
Q.18. The Transfer of Property Act , 1882 states that the chapters and sections of the Act which
relate to contracts shall be considered to be a part of the Indian Contract Act, 1872 and certain
section of this Act dealing with registration of transactions should be considered supplemental to
the Indian Registration Act, 1908.
A) correct
B) Incorrect
C) Partially incorrect.
D) None of the above.
Q.19. Lease of an immovable property is a transfer of a right to enjoy such property for a certain
time or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops,
service or any other thing of value to be rendered periodically, or on specified occasion to the
transferor by the transferee, who accepts the transfer on such terms. The price is called the
“Premium”
A) The Statement is fully correct
B) The Statement is partially correct
C) The Statement is partially incorrect
D) The Statement is fully incorrect.
Q-20. Capital Value = 100 X Net Income per annum
yield %
Where, yield = Actual rate of return
If it is correct, then, the expression
100 or 1 is called “Years’ Purchase” (Y.P), where i = rate of return
yield % i
or Re. 1.00 per annum.

A) Here Y.P. is Single Rate

B) Here, Y.P is dual rate
C) √Here, Y.P is perpetuity
D) Here, Y.P is perpetuity deferred

Q21. If A = P(1+i)n,
Where , A= Amount
P = Principal sum
i= Rate of interest and n = no. of years
Where, amount of Re. 1 (A) becomes A = (1 + i)n

A) Yes
B) No
C) It should be A = (1+r)n
D) It should be A = (1+ 1/i)n
E) None of the above

Q22. If P= A
(1+r)n
Or = A. I
(1+r)n
 Then, present value (PV) of Re. 1 in ‘n’ years at ‘r’ rate of interest
is:

PV = 1
(1+r)n

A) It should be PV = A
(1+R)n

B) It should be PV = A
(1+r)n

C) It should be P= I
(1+R)n
D) It is correct

E)It is wrong

Q. 23. Amount of Re 1per annum (APA)

= (1+r)n -1
r
where, r = rate of interest or Re 1 per annum and (1+r) = recurring
amount

A) It should be : r
(1+r)n -1

B) It should be : 1- (1+r)n
r

C) It should be : r
(1+r)n

D) It is correct
E) It is wrong

Q. 24. Annual sinking fund ,as annual amount invested

 S = r
(1+r)n -1

Thus , amount required for Rs ‘P’ = r x P, it means

n
(1+r) -1

Annual sinking fund deposit (ASFD) of Rs Px r

(1+r)n -1
deposited at the end of each year for ‘n’ no of years @ ‘r’ interest
compounded annually will accumulate to Rs ‘P’ after ‘n’ years
A) It is incorrect
B) It is partially correct
C) It is partially incorrect
D) It is correct
E) None of the above

Q. 25. “Yield” or “ actual rate of return” is the rate of interest at

which the net income is capitalized to find the capital value of the
property. The multiplier “ 100/yield” to capitalize we net income is
called the “Years’ Purchase”(YP)

A) This statement is partially correct

B) This statement is fully correct

C) This statement is partially incorrect
D) This statement is full incorrect
E) None of the above

Q. 26. The present value of Re 1 per annum or Years Purchase

(YP ) single rate 1
= i+ i
(1+i)n -1

Where I = rate of returns or yield on invested capital and

n= No. of years

A) It should be : 1- 1
(i+r)n
r
 B) It should be : (1+i )n -1
(1+i)n. i

1
C)It should be : i(1+i)n
(1 +i)n _1

D) All of the above

E) None of the above

27. The material date of valuation for the purpose of Land Acquisition Act, 1894
is the date of publication of Notification 4/5 4(1) of the Act.

A) Yes
B) No
C) May be
D) May not be

28. “Land” is the only benefit arising out of is.

A. Yes
B. No
C. May be
D. May not be
29. Publication of Declarations is 4/5 4 (2) of the L.A. Act is required for public purpose
A. Yes
B. May be
C. May not be ]
D. None of the above

30. Collector has made an ‘Award’, under L.A. Act:

A.U/S-9
B.U/S-10
C.U/S-11
D. U/S-12
31. Collectors power to take possession of the land U/S-16
A. Yes
B. No
C. Might be
D. None of the above
32. Section 7 of the Wealth Tax Act lays down the method of valuing an ‘Asset’ for the purpose of
Wealth Tax Act
A. Yes
B. May be
C. May not be
D. None of the above
33. The value of any immovable Property, being a building or land appurtenant thereto or part
thereof shall be the amount arrived to by multiplying the net maintainable Rent by the Figure:

A. 12.0
B. 10.0
C. 10.5
D. 12.5
E. 8.0

34. For the purpose of rule 3, Post – B, Schedule – III, the amount of gross maintainable rent as
reduced by:
A. A sum equal tio15% of the gross maintainable rent
B. The amount of taxes levied by any local authority in respect of the property
C. None of the above
D. All of the above.

35. Where the difference between the unbuilt area and the specified area exceed 5% but does not
exceed 10% of the aggregate area, the value arrived of shall be increased by 20% of such value
A. Yes
B. No
C. It shall be 15%
D. It is 10%.
36. “Aggregate Area”, is relation to the plot of land on which the property is constructed wears the
aggregate of the area are which the property is constructed and the built – up area:
A. This statement is partially correct
B. This statement is partially incorrect
C. This statement is fully correct
D. This statement is fully wrong
E. None of the above

37. Capital Gains is changed most Income - Tax Act, from Section HS to Section 56B.
A. Yes
B. No
C. partially correct
D. None of the above.
38. ‘Fair Market Value” of a Capital wears: price that the Capital affect could ordinary fetch on sale in
the open market are the material date
A. The statement is correct
B. The statement is wrong
C. The statement is partially correct
D. None of the above

II) MULTIPLE CHOICE TYPE (MCQ) QUESTION Quantity 5 x 4 marks = 20 Marks

To be attempted 04 MCQ
Answer the right option and mark tick from the following options:
Q-1. A developer purchased a large area of marshy land at Rs.10Lakhs before 3years. He incurred
further expenditure in developing the land at an average rate of Rs.50,000.00 annually for 3years.
What is the total cost of the investment to him today?
Assuming that interest is required on outstanding capital at the rate of 12.5%.
[Hints: Find Accumulated cost of Original Capital Outlay; and then find Accumulated cost of Annual
Cost, then add them up]
A) Rs.13,93,331.00
B) Rs.15,93,331.00
C) Rs.12,93,331.00
D) None of the above
Q-2. A man constructed an asbestos shed at a cost of Rs.2,00,000.00 recently. He let it out on lease
for 25years at a rent of Rs.20,000.00 P.A (Net). He has to reconstruct the entire property at the end
of the lease term. What is the amount he has to set aside from his income per year to provide for
this? What is the actual rate of return on his invested capital?
[ Hints: ASFD. to Re.1.00 at the end of ‘n’ years @ ‘r’% return on interest

= r , assuming r=2.5%
n
(1 + r) -1
So, ASFD. for Rs.2,00,000.00 = Rs.2,00,000.00 x ASFD for Re.1.00
True income = Net Rent p.a - ASFD
Now, find return on Capital.]
A) @ Rs.5855.00 per annum; 7%
B) @ Rs.5855.00 per annum; 7.5%
C) @ Rs.6855.00 per annum; 7%
D) @ Rs.6855.00 per annum; 6.5%
Q-3. A leasehold shop shall produce a net profit rent (Net Income) of Rs.25,000.00 for the coming
12years. What is the value of the investment if the investor is to have a 7.5% return on capital?
[ Hints: Capital Value = Net Annual Income x Years’ Purchase (Y.P.)]
A) Rs.1,90,000.00
B) Rs.1,95,000.00
C) Rs.1,92,758.00
D) Rs.1,93,020.00
E) Rs.1,93,382.00

Q-4. A residential property is situated in the prime area of a town. The property was recently
let out to a tenant on a 25years lease at a full rental value of Rs.72,000.00 per annum, the land
lord understanding to pay for repairs, insurance, Municipal Taxes and management. However,
there is a clause in the lease agreement for reviewing the rent at full rental level for every five
years. What is the value of the freeholder’s interest?
[Hints: Rent Reserved p.a, less: outgoings = Net Annual Income, then multiplying by Y.P. in
perpetuity at a suitable rate i.e. yield at 8.5%.]
A) Rs.6,69,176.00
B) Rs.6,59,176.00
C) Rs.6,79,176.00
D) Rs.6,49,176.00
E) None of the above
 Q-5. Value the freehold interest in a shop in first class position with full repairing, lease granted
20years back having 13years unexpired . The rent reserved is Rs.50,000.00 per annum. The full
rental value is Rs.1,80,000.0 per annum on full repairing terms and yield expected from
freehold is 6.5%.
[Hints: The ‘terms’ value= Rent reserved, Less: outgoing ,that is Net Annual Income
multiplying by Y.P, single rate for unexpired period of lease at given rate of return. Then, on
reversion, multiplying Y.P, in perpetuity at suitable return deferred unexpired period of lease
by the full rental value on reversion.
Thus, Value of the freeholder’s interest = ‘Terms’ value + Reversionery Value.
A) Rs.15,97,000.00
B) Rs.14,97,000.00
C) Rs.16,97,000.00
D) Rs.13,97,000.00
E) None of the above.

6. Any interested person who has not accepted the “Award” may, by written application to the
collectors, require that the matter be referred by the collector, for the determination of the
court……………..
A. This known as Reference to Court
B. This is 4/5 – 18 of the L.A. Act.
C. It should be within six weeks for the date of the collector’s Award.
D. All of the above
E. None of the above.

7. In determining the amount of compensation to be awarded for land acquired wads this Act, the
Court shall take into considerations
A. The market value of the land at the date of publication of the Notification U/S – 4 (1) of the Act
B. The market value of the land at the date of publication of the Notification U/S – 6 of the Act
C. The degree of the unfunny which has led to the Lequisition
D. Any damage which is likely to be caused to the land acquired, after the date of declaration
E. None of the above.

8. “Annual Rent” means:

A. The property is let throughout the year ending on the valuation date
B. The property is let for only a post of the previous year
C. Where the property is in the occupation of a tenant and taxs levied by any local authority
D. All of the above
E. None if the abov
 III) Answer any one (Descriptive) 1 x 10 = 10
Q. 1.Distinguish the terms: ‘Cost’, ‘Price’, and ‘Value’ with the help of an example.

Q.2.Define year’s Purchase (Y.P.)Single Rate, Year’s Purchase Dual rate and deferred Year’s purchase.

Q.3.A freehold office premises in a good location has been leased out to a sound commercial firm for a
term of 35 years at a rent Rs. 45,000.00 per annum. The building is value of the bare site is Rs.30,000.00
per annum. Similar office premises recently built area estimated at 8.5% investment. Considering
Rs.45,000.00 per annum is the market value of the property?

Q.4.A certain leasehold property is held for a term of 65 years since 1980 at a ground rent of
Rs.10,000.00 per annum. The property is sub-let on full repairing lease expiring in 12 years time at
Rs.15,000.00 per month. The present rental value is Rs. 38,000.00 per month. Value the inters of
lessee(yield taken: @9% and 3%).

Q.5.A leasehold residential flat has been purchased by a real estate dealer with 69 years lease term for
Rs.15.000.00 The dealer now wishes to let it out at a monthly rent to a company for accommodation of
its executives. If the dealer is expecting a return of 7.75 on his capital and a Sinking Fund at 3.25%,then
what net income should be expect form the letting?

Q.6.Write short answer “Capitalisation rate.”

Q.7. State matters to the neglected in determination compensation U/S – 24 of the L.A. Act.
Q.8. Discuss Part – “B” Schedule – III of the wealth Tax Act, 1957.
Q.9. Please discuss the mode of computation of “FAIR MARKET VALUE” for the purpose of Capital
Gain.