After a diagnostic quiz on the six financial functions of one and a brief review, General Appraiser Income Approach/Part 2 opens with a thorough treatment of discounted cash flow (DCF) analysis. Topics include identifying components of a DCF, projecting cash flows, analyzing leases, solving for value in a variety of common situations, and supporting the discount rate. The effects of debt financing including cash equivalence, leverage, and equity analysis are covered in detail. Income patterns and property models including applications are followed by investment analysis topics and risk analysis. Specialized applications include subdivision analysis and prospective project analysis. The course concludes with a discussion of the strengths and weaknesses of direct and yield capitalization.
Students have 45 days from the session start date to complete the course material for this program. This course is completed at the student's own pace.
Do I have to take the course exam?
You are required to complete and pass a proctored offline exam if:
• you are taking this class to meet state qualifying education requirements
• you are taking this class to meet the qualifying education requirements for an Appraisal Institute designation
You may be required to complete and pass a proctored offline exam if:
• you are taking this class to meet state continuing education requirements. Most states do not require the exam for CE credit, but please confirm this with your state licensing board.
You are not required to complete and pass a proctored offline exam if:
• if you are taking this class to meet the continuing education requirements of an Appraisal Institute designation
You will have 90 days from the time that you complete the course to take the proctored exam. Testing center locations in your area can be found by clicking on this link: www.pearsonvue.com/ai.
Module 1: Discounted Cash Flow Analysis
Module 2: Components of Discounted Cash Flow Analysis
Module 3: Forecasting Cash Flow
Module 4: Property Discounted Cash Flow Analysis Using Overall Yield Rate
Module 5: Property Discounted Cash Flow Analysis Using Overall Yield Rate(Cont.)
Module 6: Property Discounted Cash Flow Analysis Using Overall Yield Rate(Cont.)
Module 7: Mortgages
Module 8: Mortgages(Cont.)
Module 9:Yield and Mortgage Review
Module 10: Equity Valuation
Module 11: Lease Analysis
Module 12: Equity and Lease Analysis Review
Module 13: Discounted Cash Flow Review
Module 14: Income Patterns
Module 15: Introduction to Property Models: Solving for Value
Module 16: Introduction to Property Models: Solving for Yield and Change in Value
Module 17: Property Model Applications
Module 18: Supporting the Discount Rate
Module 19: Capitalization Review
Module 20: Reconciliation and Consistency Across the Approaches
Module 21: Exam Preparation
• Recognize definitions, principles and concepts related to the income capitalization approach.
• Identify, derive, and apply the formula on which DCF Analysis is based.
• Learn to calculate present value (PV), capital outlay, net present value (NPV) and IRR.
• Perform DCF analysis with different yield rates for income and reversion (split rates) and identify common errors in the analysis.
• Identifying characteristics of amortization and calculating a payment, loan balance, and term for fixed-rate amortizing mortgages with various payment frequencies.
• Solve for value given equity yield rates and properties with level and irregular income patterns, dollar and terminal capitalization rate-determined reversions, and DCR-determined loan amounts.
• Apply concepts learned to select an appropriate discount rate and calculate the yield rate for fee simple, leased fee, and leasehold estates in real property.
• Examine circumstances where the sum of the individual interests equals the fee simple and others where it does not.
• Recognize similarities between direct capitalization and yield capitalization using discounted cash flow.
• Identify additional information required by yield capitalization using discounted cash flow over that required by direct capitalization.
• Define types of perpetuity income patterns and calculate their value using direct and yield capitalization.
• Identify two cases for the property model (level income and compound rate of change in income and value) and the premises underlying each.
• Solve for yield rate, compound rate of change, and total change in value for both cases of the property model (level income and income and value changing at the same compound annual rate).
• Recognize differences in property model formulations and apply variations of the property model to case study problems.
• Recognize how estimated yield rates can be supported by capitalization rates extracted from comparable sales using yield capitalization formulas.
• Identify the respective characteristics of direct capitalization and yield capitalization, and compare and contrast the advantages and disadvantages of the two methods.
AI CE Credit for Designated members and Practicing Affiliates
• Attend Only = 175 points (residential)
or 150 points (general)
• Attend and Pass Exam = 225 points (residential)
or 200 points (general)
• Pass Exam Only = 200 points (residential)
or 150 points (general)
Basic Appraisal Principles, Basic Appraisal Procedures, General Appraiser Income Part 1 or Basic Income Capitalization.
This class has been developed for appraisers seeking general certification with experience and understanding of the fundamental concepts of appraising. This course was designed to fulfill part of the current and new AQB content requirement.
A financial calculator is required. The accepted model used in the course is the HP-12C. Candidates taking most AI exams may bring their own calculator to use during the exam. Candidates should be fully aware that AI courses are developed with HP12C keystrokes, and that using an HP12C is highly recommended.IMPORTANT! You will be asked to clear the calculator's memory before and after the examination. Only one calculator is permitted in the testing room.
Laptops, cellular phones, tablets, iPads, wearable technology (smart watch, Apple Watch, Google Glass, etc.), and other devices that can store data or connect to the Internet are NOT permitted during the exam. In addition, all watches, wallets, bags, and purses must be removed and stored out of reach prior to taking the exam.
HP-12C calculator user's manual
You must be familiar with calculator operation when the course begins. Answers to problems in course material are shown using the HP-12C. Do not come to class expecting to be taught how to use a financial calculator.
Free Review:Using a Financial Calculator; Formulas, Symbols, Math Review, and Sample Problems and Financial Calculator Practice Exercises
For additional help with the HP-12C calculator, take our online seminar, Using Your HP-12C Financial Calculator
Click Here for State Approvals
David C. Lennhoff, MAI, SRA
I agree to the terms and policies set forth under the Appraisal Institute Online Education Policy. I also certify that I am the person identified above under Personal Data and that I will personally complete each assigned module of instruction and any examination(s). I understand and agree that if I misrepresent my identity or arrange for someone else to represent himself or herself as me at any time during the Appraisal Institute online course or seminar, I will be immediately removed from the course or seminar and I will not be entitled to any refund. I further understand that if I am a member of the Appraisal Institute and participated in any misrepresentation of identity, by affirmative act or failure to act, that I will be the subject of a peer review proceeding under Regulation No. 6 for violation of the Appraisal Institute's Code of Professional Ethics and Standard of Professional Appraisal Practice, and that such peer review proceeding may result in termination of my Appraisal Institute membership.
Please allow 1 hour after registration to start an online session in progress (on or after the session start date). Go to www.appraisalinstitute.org and log in with the username and password you used when you registered. You will automatically be taken to the "My Appraisal Institute" page. Near the middle of that page your course will be listed with a link next to it that says "Go To Class".