Construction Finance Coursera Quiz Answers

All Weeks Construction Finance Coursera Quiz Answers

Construction Finance Week 1 Quiz Answers

Quiz 1: Mathematics Of Money

Q1. If you borrow $1000 from a local bank, the interest you should pay depends on:

  • Interest rate
  • Length of time that I borrow the money
  • Both of the above
  • None of the above

Q2. How much interest will you get from your $1000 deposit after 1 year if effective interest rate is 10% per year?

  • $100
  • $15
  • $50
  • $20

Q3. A deposit of $2000 is made in a bank account that pays 10% interest compounded annually. Approximately how much money will be in the account after 3 years?

  • $2200
  • $2000
  • $2662
  • $2420

Q4. The annual nominal interest rate is 10%; what is annual effective interest rate if compound monthly?

  • 12%
  • 12.68%
  • 10%
  • 10.47%

Q5. If a project’s projected return rate equals to my MARR, should you invest that project?

  • No, it is not profitable.
  • No, it might be not profitable.
  • Yes, it meets my MARR.
  • Yes, only if I have no other better solution.

Q6. What is the future value of a present value $100 after a period of 12 month, given nominal annual interest rate equals to 10%?

  • $101
  • $110
  • $100.83
  • $110.47

Q7. What is the present value of a monthly payment of $968, given nominal annual interest rate equals to 10%, and the length of time equals to 2 months?

  • $968
  • $960
  • $952.97
  • $718

Q8. Please calculate the one year simple interest and monthly compounded interest for a $1000 loan borrowed at 10% annual rate.

  • $1100, $1110
  • $100, $110
  • $1100, $1104.71
  • $100, $104.71

Q9. What is future value of 6 consecutive uniform monthly payments of $1,000, given monthly interest rate is 10%?

  • $6000
  • $7000
  • $10621.37
  • $7715.51

Q10. If A = $1000, i = 10%, n = 3, which statement below is NOT correct?

  • P = $2486.85
  • F = $3310
  • This cash flow fits uniform series model.
  • i is a nominal interest rate

Q11. Given identical annual interest rate in exactly same scenarios, compare methods of computing simple interest and compounded interest:

  1. Simple interest is higher
  2. Compounded interest is higher
  3. They are the same
  4. Before comparing, the length of interest period should be taken into consideration

Q12. Please use equations of uniform series to calculate P, given A = 2000, i = 10%, n = 10.

  • P = 10000
  • P = 12000
  • P = 12289
  • P = 12391

Q13. Which interest rate is higher in monthly compounded interest? 1% monthly rate and 12% annual rate.

  • 1% monthly rate is higher
  • 12% annual rate is higher
  • They are the same
  • Cannot be determined

Q14. Please use equations of uniform series to calculate A, given P = 10000, i = 12%, n = 12.

  • A = 1412
  • A = 1513
  • A = 1614
  • A = 1715

Q15. Please calculate NPV of a $2,000 income after 3 years, given MARR = 10%:

  • $2,000
  • $1,818.18
  • $1,652.89
  • $1,502.63

Q16. If NPV = 0, please compare IRR and MARR:

  • IRR > MARR
  • IRR = MARR
  • IRR < MARR
  • Cannot be determined

Quiz 2: Case Study: Mathematics of Money

Q1. Your company wants to get a loan to finance the purchase of earth-moving equipment.Your bank has provided you have provided by your bank with a loan plan and you consider purchasing Machine A or Machine B. Consider the following to answer this problem:

Machine A costs $525,000 to buy and can produce 25 yd per hour.

Machine B costs $625,000 to buy and can produce 35 yd per hour.

Assume equal operating and maintenance costs and that the salvage value of both machines (A & B) is zero at the end of their use (15 years).

The machine will be operated for 2,000 hours per year and the company has contracts for the next 15 years to move the earth for $1 per yd.

What is the difference between the total earnings between Machine A & B?

  • $750,000
  • $1,050,000
  • $300,000
  • $100,000

Q2. Which investment alternative (Machine A or Machine B) should be selected assuming 5% interest rate?

  • Machine A
  • Machine B

Q3. What is the Net Present Value for machine A using the assumption given in  2?

  • $-6,017
  • $101,576
  • $518,982
  • $-56,940

Construction Finance Week 2 Quiz Answers

Quiz 1: Real Estate Finance Development Projects

Q1. What does the REIT stand for?

  • Real Equity Investment Trust
  • Real Estate Interest Trust
  • Real Equity Interest Trust
  • Real Estate Investment Trust

Q2. Which of the following phase is NOT part of the project life-cycle?

  • Design
  • Construction
  • Operation
  • None of the above

Q3. Which of the below software is better suited for building a real estate financial model?

  • Word
  • Excel
  • Powerpoint

Q4. Which of the following is a parameter of zoning code?

  • Max building height
  • Max number of units allowed
  • Building setbacks
  • All of the above

Q5. Which of the followings is not a required element in calculating NOI?

  • Cash revenue
  • Debt services expenditure
  • Cash operating Expense
  • Maintenance Capital Expenditure

Q6. Which of the following is NOT a method for estimating sales price?

  • Comparable properties
  • Cap rate
  • Discounted Cash Flow
  • None of the above

Q7. Which of the following details can be used to improve feasibility study?

  • Timing of cash flow
  • Financing Structure
  • Time value of cash
  • All above

Q8. What does the NOI stands for?

  • Net Operating Income
  • Net Operation Index
  • New Operation Index
  • New Operation Income

Q9. What can you get from using discounted cash flow to evaluate a project?

  • How much a potential project will add to my wealth
  • How much a potential investment is worth to them
  • Both above
  • None of the above

Q10. Calculating NPV is discounting cash flow to T = ?

  • 0
  • 1
  • 2
  • 3

Q11. If NPV = 0, IRR is equal to?

  • Interest rate
  • Discount rate
  • Prime rate
  • None of the above

Q12. If quarterly compounded interest rate is 12%, how much is the EAIR

  • 46%
  • 48%
  • 50%
  • 57%

Q2. What is the % of Gut Rehab Cost of the total project cost?

  • 34.43%
  • 37.14%
  • 33.89%
  • 35.23%

Q3. While finding sale price using a comparable method,what was the per square foot cost of some of the comparable buildings?

  • $1145.83
  • $1135.33
  • $1034.46
  • $1133.37

Q4. What is the difference between the expected sale price calculated from the two methods taught in this course ?

  • $231,678
  • $1,507,593
  • $7​03,146
  • $1,2​03,146

Q5. What is the lowest return the project can get across all scenarios in both the methods of evaluation ?

  • -​4%
  • 5​%
  • -​2%
  • 1​0.6%

Construction Finance Week 3 Quiz Answers

Quiz 1: Designing and Building Commercial Real Estate

Q1. Which of the followings is a method of risk analysis?

  • Scenario Analysis
  • Probability-weighted Scenarios
  • Monte-Carlo Simulation
  • All above

Q2. Drawbacks of financial leverage include:

  • Increases risk of bankruptcy
  • Reduce flexibility
  • Additional supervision from lender
  • All above

Q3. Which of the followings is ineligible development cost?

  • Attorney’s fee
  • Permit fee
  • Contingency cost
  • All above

Q4. Who are typical construction lenders?

  • Local banks and S&L’s
  • National Real-Estate Development Lenders
  • Crowdfunding
  • All above

Q5. Which of the following statements on Purchase Commitment is WRONG?

  • Lender require the developer obtain a commitment-to-purchase agreement from future operating owner
  • It brings higher probability that completed building will be sold
  • It does not require minimum percentage to be rented
  • None of the above

Q6. Which index does the sponsor care about most?

  • NPV
  • IRR
  • Cap rate
  • None of the above

Q7. Decision tree method is based on:

  • Probability
  • Matrix
  • Arithmetic
  • None of the above

Q8. What is the key factor to be observed in decision trees?

  • The optimistic terminal branch
  • The least optimistic terminal branch
  • Expected value
  • None of the above

Q9. What does negative expected value mean?

  • The project should proceed
  • The project should not proceed
  • The project should proceed if IRR is positive
  • None of the above

Q10. What happens to a decision tree after the time value is taken into consideration?

  • Probability distribution at each node will change
  • Probability of each terminal branch will change
  • Expected value will change
  • None of the above

Construction Finance Week 4 Quiz Answers

Quiz 1: Project Finance

Q1. Which of the following is the most important factor in Project Finance:

  • Good management
  • Strong sponsor
  • Asset base
  • Cash flow

Q2. A project financing should always have:

  • An offtaker
  • A convertible currency
  • A sponsor guarantee
  • A stand-alone special purpose legal entity

Q3. Who is not a stakeholder in project financing?

  • Ratings agencies
  • Local populations
  • Lawyers
  • None of the above

Q4. What Principles do project financiers use to adjudicate environmental issues?

  • Latitude
  • Beale
  • Equator
  • Greenwich

Q5. What risk do project financiers seek to avoid?

  • Principal risk
  • Sovereign risk
  • Price risk
  • Currency risk

Q6. An EPC contract does what

  • Builds a project
  • Names a project
  • Finances a project
  • Operates a project

Q7. O&M contractors should

  • Operate a project
  • Be independent of a project
  • Charge a lot
  • Be known to the Sponsors

Q8. The largest source of project finance is:

  • Insurance companies
  • Sponsors
  • Governments
  • Banks

Q9. Which of the following would not generally be covered by an insurance agreement:

  • Bad weather
  • Price risk
  • Strikes
  • Bankruptcy

Q10. A completion agreement should include:

  • Physical completion
  • Financial completion
  • Economic completion
  • Physical and economic completion

Quiz 2: Risk in Project Finance

Q1. Which of the following is NOT a project party?

  • Investor
  • Contractor
  • Operator
  • Consumer

Q2. What is an investor’s typical role in a project?

  • Regulator
  • Technical adviser
  • Source of equity investment
  • Loan lender

Q3. Which of the following may make cost surpass revenue?

  • Reliable management
  • Deflation
  • Excess supply in material market
  • Risk

Q4. Which of the following is an uncertain variable to investors?

  • Overall final exposure
  • Average life of debt
  • Gross interest margin and fee
  • All above

Q5. Which kind of risk is owner’s liability typically?

  • Final cost
  • Demand for development
  • Extended schedule
  • All above

Q6. Which kind of risk may be contractor’s liability?

  • Quality
  • Operation cost
  • Changes after award
  • All above

Construction Finance Week 5 Quiz Answers

Quiz 1: Public Private Partnerships

Q1. P3 involves a long-term contractual partnership among:

  • Government or quasi-governmental entities
  • Private equity investors
  • Construction firms
  • More than the above entities

Q2. Which of the following is NOT a property of P3?

  • P3 is a non-traditional project delivery method
  • P3 requires a bankable long-term repayment stream
  • P3 transfers major project risk from public to private sector
  • Asset reverts to public sector when it has no value

Q3. Which of the following kind of project P3 CANNOT be applied?

  • Hospital
  • Toll road
  • Renewable energy plant
  • Military facility

Q4. Which of the following statements is correct?

  • P3 applies on greenfield projects only
  • P3 applies on brownfield projects only
  • Government remains in firm control of a P3 project
  • P3 has never been used in any country except the US

Q5. Which of the following is a driver of applying P3?

  • Lack of public funding
  • Economic growth
  • P3 leads to improved NPV over traditional approaches
  • All above

Q6. Which of the following is the key role in a typical P3 structure?

  • Government
  • Special purpose company
  • Customer/Users
  • Lenders

Q7. Which kind of risk may be government’s liability in DBF P3 structure?

  • Design
  • Construction
  • Operation
  • Finance

Q8. Which of the following is a property of the Market Risk Compensation Model?

  • Credit and payback risk is low
  • 5 – 10 % investment is equity
  • Mostly used in Europe
  • None of the above

Q9. Why P3 is gaining traction in the US?

  • Debt limit is being reached
  • P3 takes advantage of innovation
  • Growing support of user-based tolls over new taxes
  • All above

Q10. Which of the following is NOT a success factor of P3?

  • Partnership mindset
  • Strong governmental support
  • Federal fund support
  • Support of populace

Q11. Which of the following is NOT a benefit to government?

  • Financial benefit from operation
  • Faster delivery to the public
  • New infrastructure build for improved life quality
  • P3 projects do not rely on tax revenue

Q12. Which of the following is not a reason why P3 is trending?

  • Less political
  • P3’s value being proven
  • Bigger project coming to market
  • Private sector is lack of funding

Quiz 2: Lean in Construction Finance

Q1. The 3 step Risk Mitigation Process proceeds as follows:

  • Identify Known Risks; Set Contingency Budget; Purchase Insurance
  • Identify Common Causes; Identify Special Causes; Allow for Unknowns
  • Design, Bid, Change Order
  • Identify Known Risks; Allow for Unknowns; Assess Probability & Mitigate

Q2. Which of the following is a common cause of Risk:

  • Scale
  • Complexity
  • Innovation
  • All of the Above

Q3. Which has been defined as the ‘best methodology for uninsurable risks’

  • Design Assist
  • Design Build
  • Lean
  • Public-Private-Partnership (P3)

Q4. Project Financing is offered in order to:

  • Deliver a Return On Investment (ROI)
  • Achieve the Owner’s Value Proposition
  • Reduce Muda, Mura and Muri
  • Mitigate Design Risk

Q5. The Big Four Lean project delivery processes includes:

  • Last Planner System + Target Value Design
  • Set Based Design
  • Choosing By Advantages
  • All above

Q6. The Conditions of Satisfaction are influenced by:

  • Insurance Carriers
  • Construction Manager
  • Every Project Stakeholder
  • Lenders

Q7. Risk probability and mitigation is managed by utilizing

  • The Risk + Opportunity Register
  • Sorting Risk by Priority
  • The champion’s recommendation
  • Balancing the cost of risks with the benefits of opportunity

Q8. All project delivery is risky because:

  • There is waste in the delivery process
  • Traditional forms of agreement encourage adversarial postures
  • There are always unknowns
  • All above

Q9. Which of the following is not a form of value in construction financing:

  • Staying on Schedule
  • Staying on Budget
  • End User Experience
  • Site Safety

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