WorksheetsThe profits and DRC methods
Total questions: 12
Worksheet time: 8mins
What does DRC stand for?
(a)
Which of these is not likely to be valued by the profits method?
An office
A cinema
A tourist attraction
A pub
A EV charging station
Which of these are likely to be valued using the DRC method?
A gym
A bingo hall
A factory
A library
A prison
Which of the profits and DRC method requires an investment yield for the calculation?
The profits method
The DRC method
Both
Neither
Which of these are types of depreciation used the DRC method? (select three)
Economic
Functional
Physical
Actual
Relative
What is the EBITDA equivalent to?
Gross profit
Turnover
Net profit
What does FMOP stand for?
(a)
Why does the profits method work on the basis that the business has a reasonably efficient operator?
If a business runs unusually profitably or inefficiently that will skew the property value
A business will do well if it has an efficient manager
Inefficient operators will take a long time to value
Company accounts can be made up which is inefficient
Is land value explicit in a DRC and profits valuation?
Land value is just included in a profits valuation
Land value is just included in a DRC valuation
Land value is included in both
Land value is included in neither
Which type of deprecriation is most common in company accounts?
Straight line method
Declining balance method
S-curve method
What is the difference between and exceptional cost and an extraordinary cost in company accounts?
An exceptional cost occurs rarely but extraordinary costs are very rare
Exceptional costs are unexpected but low impact while extraordinary costs are unexpected and high impact
Exceptional costs are unexpected but foreseeable and extraordinary costs are unexpected and not foreseeable
They are both terms for the same thing except one is costlier than the other
What might be a reasonable share of the divisible balance for a pub?
The operator gets 50% and the landlord gets 50%
The operator gets 20% and the landlord gets 80%
The operator gets 80% and the landlord gets 20%
