Exercise
Answer the following questions.
1. Order the following from lowest risk to highest risk:
I. A DPP hoping to strike oil buys 125 acres in Tennessee from a cotton farmer.
II. A DPP buys a 10-year-old apartment building in downtown Seattle. It currently has a vacancy rate of 4.8%.
III. A DPP buys a partially completed condo complex in San Diego from a company that is in bankruptcy.
A. I, II, III
B. II, III, I
C. III, I, II
D. III, II, I
2. What is the difference between an operating lease and a full payout lease?
A. An operating lease pays only the operating cost of the equipment; a full payout lease pays depreciation and amortization costs
B. An operating lease is shorter term and pays less than the full cost of the equipment; a full payout lease may last for the life of the equipment and pays the purchase cost of the machinery and debt-service costs
C. An operating lease is month-to-month; a full payout lease has a specified end date
Answer true or false.
3. _____ A DPP that invests in Section 8 housing will benefit from tax credits on