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ITV521S - INTRODUCTION TO VALUATION - 1ST OPP - NOV 2025 |
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n Am I BI A u n IVER s ITY
0 F SC I En CE An D TECH n OLOGY
FACULTY OF ENGINEERING AND THE BUILT ENVIRONMENT
DEPARTMENT OF LAND AND SPATIAL SCIENCES
QUALIFICATION(S): BACHELOR OF PROPERTY STUDIES
- - - · · - - BACHELOR OF LAND ADMINISTRATION
DIPLOMA IN PROPERTY STUDIES
QUALIFICATION(S) CODE: 08BOPS
07BLAM
NQF LEVEL: 5
06DIPS
COURSE CODE: ITV521S
COURSE NAME: INTRODUCTION TO VALUATION
EXAMS SESSION: NOVEMBER 2025
PAPER:
THEORY
DURATION: 3 HOURS
MARKS:
100
EXAMINER(S)
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
MR AMIN ALLY ISSA
MODERATOR: MR SAMUEL ATO K. HAYFORD
INSTRUCTIONS
1. Read the entire question paper before answering the Questions.
2. Please write clearly and legibly!
3. Please START EACH QUESTION ON A FRESH PAGE.
4. The question paper contains a total of 5 questions.
5. You must answer ALL QUESTIONS.
6. Make sure your Student Number is on the EXAMINATION BOOK(S).
PERMISSIBLE MATERIALS
1. Non-programmable Scientific Calculator
THIS QUESTION PAPER CONSISTS OF 9 PAGES {Including this front page)
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Introduction to Valuation
llV521S
Question 1
For each of the following statements indicate whether it is 'TRUE' or 'FALSE'. Each correct answer carries 1
mark.
1.1 Land is physically indestructible but its value can change over time.
1.2 Market price always reflects the true market value of a property.
1.3 Depreciation always applies to land as it wears out over time.
1.4 A property's location rarely affects its value.
1.5 Fixtures legally form part of the real property.
1.6 Leasehold and Freehold interests are valued the same way in the investment method.
1.7 The present value of $1 table calculates the future worth of $1 invested now.
1.8 In an imperfect property market, price and value can differ due to lack of perfect information.
1.9 The cost method of valuation includes adding land value after accounting for depreciation of the
building.
1.10 The residual method of valuation is suitable only for fully built, stable properties.
1.11 Investment value is based on an individual investor's criteria, which can be higher or lower than
market value.
1.12 Comparative sales data should be adjusted for differences in time, location, and physical
characteristics .
1.13 The Annual Sinking Fund table helps determine the amount to save annually to accumulate a future
sum.
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Introduction to Va luation
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1.14 Real estate's immobility makes it more sensitive to its immediate environment than other
investments.
1.15 GIS can be used to assess environmental factors affecting land value .
1.16 In informal settlements, land values typically exceed those in formal settlements due to scarcity.
1.17 A valuation is valid for any time and any market conditions once completed.
1.18 Leasehold estates can have an investment value even after the lease expires.
1.19 Capitalization converts an income stream into a capital value .
1.20 Regression analysis is well established in valuation practice and used universally.
[20]
Question 2 : Multiple Choice questions
Read each question carefully. Among the alternative answers, choose the letter that correspond to the
best/correct answer. Each correct answer carries 1 mark.
2.1 Which principle states that a buyer will not pay more for a property than the cost to rebuild it?
A. Investment Method
B. Cost Method
C. Comparative Method
D. Residual Method
2.2 What is the primary purpose of a valuation report?
A. To estimate the monetary worth of property under market conditions
B. To give a personal opinion about property
C. To list all improvements on land
D. To forecast future prices
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Introduction to Valuation
2.3 Which valuation method relies on comparing recently sold similar properties?
A. Investment Method
B. Cost Method
C. Comparative Method
D. Profits Method
2.4 What is depreciation in the cost method?
A. Increase in property value minus value of land
8. Loss of utility or value over time
C. Value of the land minus the improvement
D. Market price
2.5 Which term refers to the sale price adjusted for typical market conditions?
A. Forced Sale Value
B. Liquidation Value
C. Open Market Value
D. Book Value
2.6 What is an annuity in finance?
A. A lump sum payment
B. Series of equal payments over time
C. The value of land
D. Depreciation
2.7 Which table is used to determine future value when investing $1 today?
A. Present Value of $1 Table
B. Years Purchase Table
C. Annual Sinking Fund Table
D. Amount of One Dollar Table
2.8 Which of the following is NOT normally considered in property value?
A. Location
B. Colour of paint
C. Age of the building
D. Accessibility
2.9 Which valuation method is most appropriate for a petrol station?
ITV521S
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Introduction to Valuation
A. Comparative Method
B. Cost Method
C. Investment Method
D. Profits Method
2.10 If a father sells his house to his son, you expect the son to pay:
A. For his hospital bills due to old age
B. A sum equal to the market value
C. Less than the market value
D. None of the above
2.11 What defines freehold ownership?
A. Ownership for a fixed term
B. Ownership in perpetuity
C. Ownership only of buildings
D. Lease of land
2.12 Which factor affects demand for real estate the most?
A. Population growth
B. Soil type
C. Building materials
D. Airspace rights
2.13 Which table gives the present worth of a $1 annual payment for n years?
A. Amount of One Dollar Table
B. Present Value of $1 Table
C. Present Value of $1 per Annum Table
D. Annual Sinking Fund Table
2.14 Which is NOT a characteristic of real estate?
A. Mobility
B. Immobility
C. Durability
D. Heterogeneity
ITV521S
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Introduction to Valuation
2.15 The years purchase (VP) in perpetuity formula assumes which time period?
A. 5 years
B. 20 years
C. 50 years
D. Infinity
2.16 Which of the following is a typical outgoing in investment property?
A. Repairs
B. Purchase price
C. Legal fees
D. Gross income
2.17 Which of the following factor is NOT part of the property market's imperfections?
A. Lack of central market
B. Homogeneity of property
C. Limited buyers and sellers
D. Imperfect information
2.18 Which of the following method of Valuation requires estimating building cost new?
A. Investment Method
B. Residual Method
C. Cost Method
D. Profits Method
2.19 What is the basis of the residual method of valuation?
A. Potentia l development surplus
B. Historical cost
C. Market comparison
D. Income capitalization
2.20 Which of the following is the least reliable in informal settlements?
A. Cadastral maps
B. Land value maps
C. GIS data
D. Sale prices
ITV521S
[20]
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Introduction to Valuation
Question 3
ITV521S
3.1 Calculate the amount to be received in 6 years if you invest N$22,000 now at 10% interest rate. (2)
3.2 A payment of N$50,000 is due in 3 years. What is its value now assuming a discount rate of 10%? (2)
3.3 An individual invests N$5,000 at the end of each year for 8 years in an account earning 9% interest
annually. What is the total amount accumulated after 8 years?
(2)
3.4 An investor contributes N$2,000 at the end of each year for 5 years at an interest rate of 10%. What
will be the total amount accumulated after 5 years?
(2)
3.5 A company needs N$15,000 in 12 yea rs. How much must it deposit annually while earning 4%
interest, to accumulate this amount?
(2)
3.6 A farmer expects to receive a government grant of N$10,000 exactly 5 years from today to improve
irrigation on his farm. Using a discount rate of 8%, determine the amount he should consider as the
value of this grant today for budgeting purposes.
(2)
3.7 A recent graduate invests N$10,000 in a savings account with an annual interest rate of 6%. Calculate
how much money the graduate will have in the account after 7 years, assuming interest compounds
annually.
(2)
3.8 A construction company needs to replace a bulldozer in 10 years, which is expected to cost
N$200,000 at that time . To prepare, they want to deposit an equal amount at the end of every yea r
into an interest-bearing sinking fund that earns 5% annually. Calculate the annual payment required.
(2)
3.9 An investor plans to buy a rental property that will generate an annual net income of N$50,000 over
the next 15 years. The investor's required rate of return is 7%. Calculate the capital value of the
expected income stream.
(2)
3.10 A commercial building owner expects to receive a steady net income of N$600,000 annually in
perpetuity from the property. Using a capitalization rate of 8%, estimate the capital value of th is
property.
(2)
[20]
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Introduction to Valuation
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Question 4
4 .1 A rental property gene rates an annual net income of N$12,000. If the investor's required rate of return
(capital ization rate) is 8%, calculate the capital value of the property using the investment method.
(3)
4.2 A similar property was sold two years ago for N$250,000. Assum ing an inflation rate of 5% per
annum, what would be the adjusted sale price today?
(3)
4.3 A building's replacement cost is estimated at N$500,000. After accounting for 20% depreciation, and
adding the land value of N$100,000, what is the total value of the property using the cost method?
(3)
4.4 A development project has a gross development value of N$1,200,000 . Estimated development costs
are N$800,000, and the developer expects a 10% profit margin on the GDV. Calculate the residual land
value .
(3)
4.5 A business generates a net profit of N$40,000. The tenant's remuneration is N$5,000 and interest on
tenant's capital is N$3,000. What is the rental value using the profits method?
(3)
4.6 A valuer in Windhoek is appraising a 3-bedroom residential house in the Olympia suburb. A comparable
property, recently sold for N$1,200,000, has similar features but is 10% smaller in floor area (100 m2
vs. 110 m2 for the subject property) and lacks a modern kitchen, warranting a N$50,000 downward
adjustment for the comparable. The size difference requires a 10% upward adjustment based on the
comparable's price. What is the estimated market value of the subject property?
(5)
4.7 A small retail building in Swakopmund generates an annual gross income of N$240,000. Operating
expenses (maintenance, taxes, insurance) are N$60,000, and the vacancy rate is 5% of gross income.
The market capitalization rate for similar properties is 8%. What is the estimated value of the property
using the Income Approach?
(5)
[25]
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Introduction to Valuation
Question 5
5.1 Differentiate between Market Value, Market Price, and Investment Value
5.2 Highlight how the following factors affect property values:
i) Location
ii) Physical condition
iii) Economic conditions
iv) Accessibility
5.3 Explain the role of GIS and Cadastral Maps in Land Valuation.
ITV521S
(6)
(4)
(1)
(1)
{1)
{1)
(5)
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November 2025