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Hbc2301:Project Management Question Paper
Hbc2301:Project Management
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2014
QUESITON ONE – (30 MARKS)
(a) Explain the various risks that a prospective real estate investor needs to consider. (5 Marks) (b) Discuss five ways of mitigating housing problems in Kenya. (5 Marks) (c) Appraisal is the estimation of value of real estate property. Explain the main users of appraisal information and its importance to them. (5 Marks) (d) Explain the attributes of real estate secondary markets. (5 Marks) (e) An investor has Shs.700,000 and wants to invest at 8.5% interest rate with 30 year maturity period and a monthly payment. It is further agreed that the rate is subject to adjustment at the end of each year. the adjustment rate is 0.25% per annum upwards. Required What are the monthly payment for first, second and third month? (7 Marks) (f) An apartment block has gross income of Shs.1,200,000. The cost of this block is fifteen times the gross income. Required: Estimate the value of this property (3 Marks)
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QUESTION TWO – (20 MARKS)
(a) Jorum is happy to have secured a well paying job after graduation. He is contemplating investing in home. Advice him on the following issues; Required: Advice him on the alternative methods of financing the purchase and subsequent development of the real property. (5 Marks)
(b) Describe five primary mortgage market makers in the real estate industry. (10 Marks) (c) A borrower is able to repay a proposed mortgage of shs100,000 per annum for three years. The rate of interest is 10% Required How much will you be willing to loan to the borrower. (5 Marks)
QUESTION THREE – (20 MARKS)
Write explanatory notes on the following as used in real estate financing;
(a) Foreclosure (b) Mortgage securitization (c) Real estate syndication (d) Leveraged lease (e) Net lease (f) Net – net lease (g) Net – net – net lease (20 Marks)
QUESTION FOUR – (20MARKS)
(a) Define the term real estate. (2 Marks) (b) Explain the main types of estates. (4 Marks) (c) Real Estate Investments Ltd is a company incorporated in Kenya dealing with development of real estate. The company issued Shs.100million par value, 16% 10 year bond five years ago. The bond was issued at 2% discount and issuing costs amounted to Shs.2million.
The interest rates in the market have declined and refinancing possibility is being considered.
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A new shs.100million par value, 12%, five year bond can be issued by the company. Issue costs and discount on issue will be 5% and 3% of the par value respectively. The discount is meant to attract investors.
The old bond can be redeemed at 10% premium and in addition, 2 months interest penalty will have to be paid on redemption. The corporation tax rate is 40% and the after tax cost of debt is 7%.
Required: Advice the company whether it is worthwhile to replace the existing bond. (14 Marks)
QUESTIO FIVE – (20 MARKS)
You are the manager of Jitegemee consultancy firm. Your client has received an offer of Sh.5,000,000 from his financial for development in real estate property. The facility should be paid in five years at an interest rate of 10% with annual installment at the end of each year.
Required:
(a) Advice him on the annual repayment amount (5 Marks) (b) Prepare a loan amortization schedule for you client (5 Marks) (c) Discus the main professional services in real estate industry (5 Marks) (d) Explain the main types of real estate investment trusts (REITS) (5 Marks)
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