What a mother of a question this was. I think I legitimately spent 30minutes on this one item set. I really hope there isn’t anything this involved come test day. Anyone else feel the same? Or do I need a massive AA review (not sure if it would help… still got 6/6, just took me forever)?
I actually like that item sets, CFAI exam won’t go to that detail but that set actually helps you to understand every directions it could come to you. As I remember, this is a similiar sets on last year exam
I have two questions regarding this set: 1. it didn’t give you gross income, but the answer actually used NOI for calculation. is it normal to do this? 2. the debt service in the question only included interest payments, so it is deducted before tax; how about if principal service is involved? is it deducted from after tax cash flow? I got 4/6 on this set … but 85% for the whole AM, I am still wondering how did I do that …
- It said that the NOI was 80% of gross income. 2. Not entirely sure. However, I would assume debt service to mean both principle and interest (or only interest if applicable).
1.for the NOI, use gross income for sure. The answer is wrong, I asked schweser support and they said using gross income 2. I believe you have to use pmt calculation to get the payment as the answer stated out. It was a while aog, can’t remember the details
cheers folks. there are just TOO MANY little damn details …