3. Property Development

Site Selection — Quiz

Test your understanding of site selection with 5 practice questions.

Practice Questions

Question 1

Which valuation metric is the reciprocal of the capitalization rate, representing the multiple of net operating income that a buyer is willing to pay?

Question 2

A developer plans to acquire two adjacent parcels: Parcel 1 is 4 acres at \100 000/acre, Parcel 2 is 6 acres at \$150 000/acre. What is the weighted average land cost per acre?

Question 3

A rectangular site measures 100 ft north–south and 200 ft east–west. Elevation at southwest corner is 100 ft and at northeast corner is 95 ft. What is the approximate slope percentage along the diagonal from SW to NE?

Question 4

Calculate the net present value (NPV) of a site acquisition requiring an initial outlay of \400 000 and generating cash flows of \$100 000 in Year 1, \$150 000 in Year 2, and \$200 000 in Year 3 at a discount rate of 10 %.

Question 5

What is the primary purpose of a development pro forma in site selection analysis?