LAND & BUILDING VALUER EXAMINATION

MOCK TEST – 1

MOCK TEST WITH CORRECT ANSWERS & EXPLANATIONS

IMPORTANT CEV GROUP EXAMINATION NOTE

The uploaded model paper contains several questions where the printed answer appears to depend on an implicit assumption, an older convention, or—in a few cases—does not reconcile cleanly with the stated numerical data.

For a professional IBBI/valuer mock test, the better approach is therefore:

1. Do not memorise the printed answer key blindly.

The valuer should understand:

Question → Principle → Formula → Calculation → Conclusion

rather than:

Question → Memorised Option

2. Particularly verify numerical questions.

For example, the profitability-index question demonstrates why this matters. If ₹16 lakh is genuinely NPV on a ₹10 lakh investment, PI is not 1.6; the implied PV of inflows is ₹26 lakh and PI is 2.6.

3. Distinguish valuation concepts carefully.

Candidates should not confuse:

Market Value
Fair Value
Investment Value
Value-in-Use
Reinstatement Value
Depreciated Replacement Cost
Forced Sale Value
Liquidation Value
Residual Value
Salvage/Scrap Value

4. Always identify the valuation date.

The valuation date is not necessarily the inspection date or report date. This is especially important in:

bank valuation;
taxation;
land acquisition;
insolvency;
court matters;
financial reporting.

5. For land valuation, always consider highest and best use.

A large parcel cannot automatically be valued at the rate of a small developed residential plot without appropriate consideration of:

development costs;
road formation;
open spaces;
plotting;
infrastructure;
holding period;
finance;
marketing;
development risk;
developer’s profit.

CEV GROUP

LAND & BUILDING VALUER EXAMINATION

MOCK TEST – 1

Revised Syllabus – Effective from 21 August 2026

Asset Class: Land & Building

Instructions:

Select the most appropriate answer.
Calculations should be carried out using the information supplied in the question.
The answers below are independently reasoned rather than merely copied from the source answer key.
Particular care should be taken with valuation terminology, legal principles and financial mathematics.

PART A – ECONOMICS, ACCOUNTING & BASIC CONCEPTS

QUESTION NO. 1

When the proportionate change in price is equal to the proportionate change in quantity demanded of a commodity, the demand is called:

OPTION 1: Unitary elastic demand
OPTION 2: Relatively elastic demand
OPTION 3: Relatively inelastic demand
OPTION 4: Cross elasticity

CORRECT ANSWER: OPTION 1 – Unitary Elastic Demand

DETAILED SOLUTION & EXPLANATION

Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.

$Ed=% Change in Quantity Demanded/% Change in Price$

When the percentage change in quantity demanded is exactly equal to the percentage change in price:

$Ed=1$

Such demand is called unitary elastic demand.

For example, if price increases by 10% and quantity demanded decreases by 10%, elasticity is 1.

Why the other options are incorrect:

Option 2: Relatively elastic demand means elasticity is greater than 1.
Option 3: Relatively inelastic demand means elasticity is less than 1.
Option 4: Cross elasticity concerns the effect of the price of one commodity on demand for another commodity.

VALUER’S TAKEAWAY:
Understanding elasticity is useful in analysing how changes in market conditions may influence real-estate demand.

QUESTION NO. 2

A market having only one seller selling a homogeneous product to many buyers is known as:

OPTION 1: Oligopoly
OPTION 2: Monopoly
OPTION 3: Perfect competition
OPTION 4: Monopolistic competition

CORRECT ANSWER: OPTION 2 – Monopoly

DETAILED SOLUTION & EXPLANATION

A monopoly exists where there is essentially a single seller supplying a product or service to the market.

The monopolist has substantial control over supply and therefore potentially over price, subject to demand and regulatory constraints.

Oligopoly: Few sellers.
Monopoly: One seller.
Perfect competition: Large number of buyers and sellers.
Monopolistic competition: Many sellers offering differentiated products.

VALUER’S TAKEAWAY:
Market structure affects demand, pricing power, investment decisions and ultimately property and business valuation.

QUESTION NO. 3

Theories of factors of production consider ______ to be the reward for the entrepreneur.

OPTION 1: Rent
OPTION 2: Interest
OPTION 3: Profit
OPTION 4: Capital

CORRECT ANSWER: OPTION 3 – Profit

EXPLANATION

The classical classification is:

Factor	Reward
Land	Rent
Labour	Wages
Capital	Interest
Entrepreneur	Profit

Therefore, the entrepreneur’s reward is profit.

QUESTION NO. 4

The frequency at which one unit of currency is used to purchase domestically produced goods and services during a given period is known as:

OPTION 1: Velocity of money
OPTION 2: Speed of money
OPTION 3: Momentum of money
OPTION 4: Count of circulation of money

CORRECT ANSWER: OPTION 1 – Velocity of Money

EXPLANATION

The velocity of money indicates how frequently a unit of money circulates in the economy during a specified period.

A commonly used relationship is:

$MV=PYMV=PY$

where:

$MM$ = money supply
$VV$ = velocity of money
$PP$ = price level
$YY$ = real output

Therefore, Option 1 is correct.

QUESTION NO. 5

A person has an income of ₹30,000 and consumption of ₹10,000. His propensity to save is:

OPTION 1: 1.33
OPTION 2: 0.33
OPTION 3: 0.67
OPTION 4: 1.50

CORRECT ANSWER: OPTION 3 – 0.67

DETAILED CALCULATION

Income:

$Y=₹30,000Y=₹30,000$

Consumption:

$C=₹10,000C=₹10,000$

Saving:

$S=Y-CS=Y-C$ $S=30,000-10,000=₹20,000S=30,000-10,000=₹20,000$

Average propensity to save:

$APS=SYAPS=\frac{S}{Y}$ $APS=20,00030,000=0.6667APS=\frac{20,000}{30,000}=0.6667$

Approximately:

$APS=0.67APS=0.67$

Therefore, Option 3 is correct.

QUESTION NO. 6

Investment does not depend significantly upon the:

OPTION 1: Demand
OPTION 2: Level of income
OPTION 3: Progress of technology
OPTION 4: Expectations of the entrepreneur

CORRECT ANSWER: OPTION 2 – Level of Income

EXPLANATION

Investment decisions are strongly influenced by:

expected demand;
technological developments;
expected profitability;
business expectations;
interest rates and financing conditions.

In the context of the question, the level of income is the least significant direct determinant of investment among the alternatives.

QUESTION NO. 7

Under the double-entry system, accounts are primarily classified into:

OPTION 1: Receiver and giver accounts
OPTION 2: Income and expense accounts
OPTION 3: Real and nominal accounts
OPTION 4: Personal and impersonal accounts

CORRECT ANSWER: OPTION 4 – Personal and Impersonal Accounts

EXPLANATION

Accounts may broadly be classified as:

Personal accounts
Impersonal accounts, which include:
- Real accounts
- Nominal accounts

Thus, the more comprehensive classification offered in the question is personal and impersonal accounts.

QUESTION NO. 8

For a real-estate construction company, which of the following is not a component of the Profit & Loss Statement?

OPTION 1: Revenue from apartment sales
OPTION 2: Interest paid to lenders
OPTION 3: Cash deposited in bank
OPTION 4: Depreciation expense

CORRECT ANSWER: OPTION 3 – Cash Deposited in Bank

EXPLANATION

Cash deposited in a bank is fundamentally a balance-sheet/cash-flow item, not itself an income or expense.

On the other hand:

apartment-sale revenue → income;
interest paid → finance expense;
depreciation → expense.

Therefore, Option 3 is correct.

QUESTION NO. 9

The difference between selling price and variable cost per unit is called:

OPTION 1: Contribution margin
OPTION 2: Interest margin
OPTION 3: Rent margin
OPTION 4: Profit margin

CORRECT ANSWER: OPTION 1 – Contribution Margin

FORMULA

$Contribution per unit=Selling Price−Variable Cost per unitContribution\ per\ unit=Selling\ Price-Variable\ Cost\ per\ unit$

Contribution first contributes towards recovery of fixed costs; the balance thereafter becomes profit.

PART B – LAW & REGULATORY FRAMEWORK

QUESTION NO. 10

Which of the following is generally regarded as non-justiciable in a court of law?

OPTION 1: Preamble
OPTION 2: Fundamental Rights
OPTION 3: Fundamental Duties
OPTION 4: Directive Principles of State Policy

CORRECT ANSWER: OPTION 4 – Directive Principles of State Policy

EXPLANATION

The Directive Principles of State Policy provide constitutional guidance to the State but are not enforceable by courts in the same manner as Fundamental Rights.

Valuation relevance:
A valuer dealing with land acquisition, planning, development or governmental policy must distinguish between enforceable legal rights and constitutional policy directives.

QUESTION NO. 11

A contract to perform the promise or discharge the liability of a third person in case of his default is known as:

OPTION 1: Contract of indemnity
OPTION 2: Contract of guarantee
OPTION 3: Contingent contract
OPTION 4: Quasi-contract

CORRECT ANSWER: OPTION 2 – Contract of Guarantee

EXPLANATION

A contract of guarantee involves:

a principal debtor;
a creditor; and
a surety.

The surety undertakes to discharge the liability of the principal debtor upon default, subject to the terms of the guarantee.

QUESTION NO. 12

A tort is generally regarded as a right:

OPTION 1: In rem
OPTION 2: In personam
OPTION 3: In rescission
OPTION 4: In novation

CORRECT ANSWER: OPTION 1 – In Rem

EXPLANATION

A tort involves a civil wrong giving rise to a right enforceable against persons generally, hence it is traditionally described as a right in rem.

A right in personam, by contrast, is enforceable against a specific person.

QUESTION NO. 13

Under the Arbitration and Conciliation Act, 1996, if the parties fail to determine the number of arbitrators, the arbitral tribunal shall consist of:

OPTION 1: Sole arbitrator
OPTION 2: Civil court
OPTION 3: High Court Judge
OPTION 4: District Judge

CORRECT ANSWER: OPTION 1 – Sole Arbitrator

EXPLANATION

Where the arbitration agreement does not specify the number of arbitrators, the statutory framework provides for a sole arbitrator.

The matter does not automatically become a civil-court proceeding merely because the agreement does not specify the number.

QUESTION NO. 14

With reference to auction sales, which statement is correct?

OPTION 1: Auctioneer can freely accept payment by bill of exchange
OPTION 2: Auctioneer cannot sell goods on credit or accept payment by bill of exchange contrary to the statutory rule
OPTION 3: Auctioneer must mandatorily accept cheque
OPTION 4: Auctioneer may always sell on credit

CORRECT ANSWER: OPTION 2

EXPLANATION

The statutory rules governing auction sales place restrictions on credit sales and payment by negotiable instruments unless applicable exceptions or agreements operate.

For examination purposes, Option 2 is the intended correct proposition.

QUESTION NO. 15

Mr. X asks the Court to declare that he is entitled to certain land possessed by Mr. Y, based upon facts asserted by X and denied by Y. Who bears the burden of proving those facts?

OPTION 1: Mr. Y
OPTION 2: Neither party
OPTION 3: Mr. X
OPTION 4: Registrar of the property

CORRECT ANSWER: OPTION 3 – Mr. X

EXPLANATION

The general evidentiary principle is that the person who asserts a fact and seeks judgment based upon that fact bears the initial burden of proving it.

Therefore, X must establish the facts upon which his claim is based.

QUESTION NO. 16

Under Section 36 of the Insolvency and Bankruptcy Code, 2016, the liquidator holds the liquidation estate:

OPTION 1: As agent of the debtor
OPTION 2: As agent of the Committee of Creditors
OPTION 3: As fiduciary for the benefit of all creditors
OPTION 4: As fiduciary for the benefit of all stakeholders

CORRECT ANSWER: OPTION 3 – As Fiduciary for the Benefit of All Creditors

EXPLANATION

The liquidation estate is held by the liquidator in a fiduciary capacity for the benefit of the creditors as contemplated under Section 36.

Valuation relevance:
A registered valuer engaged in liquidation matters must understand the distinction between:

liquidation estate;
excluded assets;
secured assets;
stakeholder interests; and
realisable value.

QUESTION NO. 17

Under Section 231(2) of the Companies Act, 2013, where a sanctioned compromise or arrangement cannot be satisfactorily implemented and the company is unable to pay its debts according to the scheme, the Tribunal may:

OPTION 1: Wind up the company
OPTION 2: Automatically restructure the debt
OPTION 3: Call for rearrangement
OPTION 4: Replace the management

CORRECT ANSWER: OPTION 1 – Wind Up the Company

EXPLANATION

The provision empowers the Tribunal to order winding up where the statutory conditions are satisfied.

QUESTION NO. 18

Under the SARFAESI Act, 2002, the secured creditor generally approaches which forum for an application concerning enforcement of security interest?

OPTION 1: Debt Recovery Tribunal
OPTION 2: High Court
OPTION 3: National Company Law Tribunal
OPTION 4: District Court

CORRECT ANSWER: OPTION 1 – Debt Recovery Tribunal

EXPLANATION

The Debt Recovery Tribunal (DRT) is the principal statutory forum under Section 17 for a person aggrieved by measures taken under Section 13(4) of SARFAESI.

Valuer relevance:
SARFAESI valuations frequently involve:

market value;
distress/forced-sale considerations;
realisable value;
security value; and
valuation date.

PART C – STATISTICS, ENVIRONMENT & ETHICS

QUESTION NO. 19

When different observations are associated with different weights, the resulting mean is called:

OPTION 1: Weighted arithmetic mean
OPTION 2: Harmonic mean
OPTION 3: Standard mean
OPTION 4: Geometric mean

CORRECT ANSWER: OPTION 1

EXPLANATION

The weighted arithmetic mean is:

$Xˉw=∑WX∑W\bar X_w=\frac{\sum WX}{\sum W}$

It is particularly useful where observations have unequal importance.

QUESTION NO. 20

A pattern of change within a year that tends to repeat from one period to another is known as:

OPTION 1: Irregular variation
OPTION 2: Seasonal variation
OPTION 3: Secular trend
OPTION 4: Cyclical fluctuation

CORRECT ANSWER: OPTION 2 – Seasonal Variation

EXPLANATION

Seasonal variations recur at regular intervals within a year.

For example, demand for certain residential properties, commercial spaces or tourist accommodation can display seasonal patterns.

QUESTION NO. 21

Technology that permits safe, efficient and inexpensive clean-up of contaminants in property tends to minimise:

OPTION 1: Gain
OPTION 2: Loss
OPTION 3: Fluctuations
OPTION 4: Uncertainty

CORRECT ANSWER: OPTION 2 – Loss

EXPLANATION

Environmental contamination can adversely affect property value. If technology makes remediation safer, cheaper and more effective, the negative impact on value can be reduced.

QUESTION NO. 22

What planning provision is generally appropriate around the battery limit of an industry having significant odour problems?

OPTION 1: No-development zone
OPTION 2: Green belt
OPTION 3: Special permission zone
OPTION 4: Industrial regulation zone

CORRECT ANSWER: OPTION 2 – Green Belt

EXPLANATION

A green belt can provide a buffer between industrial activity and surrounding areas and can assist in mitigating environmental impacts.

QUESTION NO. 23

Which Act historically contains provisions relating to health and safety in factories/industrial establishments?

OPTION 1: Environment Protection Act
OPTION 2: Forest Act
OPTION 3: Factories Act
OPTION 4: Industrial Disputes Act

CORRECT ANSWER: OPTION 3 – Factories Act

EXPLANATION

The Factories Act, 1948 historically dealt extensively with health, safety and welfare requirements in factories.

Important examination note: The legal framework has evolved, including labour-code developments. Candidates should therefore study the current syllabus/reference material applicable to the examination date rather than relying solely on older statutory terminology.

QUESTION NO. 24

Which of the following is least consistent with ethical professional behaviour?

OPTION 1: Bribing
OPTION 2: Negotiating
OPTION 3: Advocating
OPTION 4: Lobbying

CORRECT ANSWER: OPTION 1 – Bribing

EXPLANATION

Bribery is fundamentally inconsistent with professional integrity and independence.

For a registered valuer, ethical independence is particularly important because valuation reports may affect:

lending;
insolvency;
taxation;
corporate transactions;
litigation; and
public authorities.

QUESTION NO. 25

As an independent valuer, the valuer should not charge a:

OPTION 1: Professional fee
OPTION 2: Success fee
OPTION 3: Mandate fee
OPTION 4: Legal fee

CORRECT ANSWER: OPTION 2 – Success Fee

EXPLANATION

A success-linked fee can create a conflict between the valuer’s professional judgment and the desired outcome of the client.

The valuation must be based upon professional analysis rather than the value desired by the client.

QUESTION NO. 26

Professional independence is particularly associated with which pair of fundamental professional principles?

OPTION 1: Integrity and due diligence
OPTION 2: Integrity and objectivity
OPTION 3: Due diligence and professional competence
OPTION 4: Objectivity and due diligence

CORRECT ANSWER: OPTION 2 – Integrity and Objectivity

EXPLANATION

Independence requires the valuer to maintain:

integrity – honesty and professional conduct; and
objectivity – freedom from bias, conflict and undue influence.

PART D – LAND, PROPERTY LAW & VALUATION PRINCIPLES

QUESTION NO. 27

Under the land-acquisition valuation framework referred to in the source question, the relevant date for determining the value is associated with the:

OPTION 1: Date of proposal
OPTION 2: Date of public hearing
OPTION 3: Date of impact assessment
OPTION 4: Date of notification

CORRECT ANSWER: OPTION 4 – Date of Notification

EXPLANATION

For the examination framework represented by the question, the relevant valuation date is linked to the statutory notification date.

A valuer must always identify the legally prescribed valuation date rather than automatically using the inspection date or report date.

QUESTION NO. 28

Which factor is not primarily a building-rule/planning characteristic affecting valuation?

OPTION 1: Size of rooms
OPTION 2: Population in the area
OPTION 3: Height of building
OPTION 4: Land use and zoning

CORRECT ANSWER: OPTION 2 – Population in the Area

EXPLANATION

Population can certainly influence market demand and therefore property value, but it is not primarily a physical/planning parameter of the building itself.

QUESTION NO. 29

The principal historical purpose behind Rent Control legislation was to:

OPTION 1: Avoid exploitation of tenants
OPTION 2: Manage supply and demand
OPTION 3: Ensure easy availability of dwellings
OPTION 4: Improve the economy

CORRECT ANSWER: OPTION 1

EXPLANATION

Rent-control legislation historically sought, among other objectives, to protect tenants from excessive rents and arbitrary eviction.

Valuation consequence:
A rent-controlled property may have a significantly different value from an equivalent freely marketable property because the actual rent may differ substantially from market rent.

QUESTION NO. 30

Which statement is correct regarding an easement?

OPTION 1: It is a possessory right
OPTION 2: It is a non-possessory right
OPTION 3: It necessarily relates to movable as well as immovable property
OPTION 4: It is merely a licence and not a right

CORRECT ANSWER: OPTION 2 – Non-Possessory Right

EXPLANATION

An easement is a right enjoyed by the owner/occupier of one property over another property for beneficial enjoyment of the dominant heritage.

Examples include:

right of way;
right to light;
right to drainage.

It does not ordinarily amount to possession of the servient property.

QUESTION NO. 31

Which is not a recognised means of transfer of an interest in immovable property under the Transfer of Property Act framework?

OPTION 1: Sale of plot
OPTION 2: Gift of land
OPTION 3: Mortgage of plot
OPTION 4: Hypothecation of land

CORRECT ANSWER: OPTION 4 – Hypothecation of Land

EXPLANATION

The Transfer of Property Act expressly recognises transactions such as:

sale;
mortgage;
lease;
exchange; and
gift.

Hypothecation is generally associated with movable assets and does not constitute the ordinary statutory mode of creating a mortgage of immovable property.

QUESTION NO. 32

Which is not a basic type of lease identified in the source framework?

OPTION 1: Building lease
OPTION 2: Standard lease
OPTION 3: Sub-lease
OPTION 4: Occupational lease

CORRECT ANSWER: OPTION 2 – Standard Lease

EXPLANATION

“Standard lease” is not ordinarily treated as a distinct basic classification in the manner contemplated by the other choices.

QUESTION NO. 33

The Hindu Succession Act, 1956 does not ordinarily apply to a:

OPTION 1: Follower of Arya Samaj
OPTION 2: Buddhist
OPTION 3: Jain
OPTION 4: Person governed by Christian personal law

CORRECT ANSWER: OPTION 4

EXPLANATION

The Hindu Succession Act extends to Hindus and certain persons covered by its statutory definition, including Buddhists, Jains and Sikhs, subject to the Act.

A person governed by Christian personal law is outside this statutory definition.

QUESTION NO. 34

Bridges, roads and certain infrastructure projects are generally characterised in valuation terms as having:

OPTION 1: Value-in-exchange
OPTION 2: Value to owner
OPTION 3: Value-in-use
OPTION 4: Value to user

CORRECT ANSWER: OPTION 3 – Value-in-Use

EXPLANATION

Specialised infrastructure may have limited independent marketability and may derive its principal economic utility from its intended use.

Therefore, value-in-use is often the more appropriate conceptual basis.

QUESTION NO. 35

Which is not a physical factor but can nevertheless affect the valuation of a property?

OPTION 1: Damage to building
OPTION 2: GDP
OPTION 3: Property location
OPTION 4: Neighbourhood properties

CORRECT ANSWER: OPTION 2 – GDP

EXPLANATION

GDP is a macroeconomic factor.

Physical/property-specific factors include:

building condition;
location;
neighbourhood characteristics;
site characteristics.

GDP may influence real-estate demand and prices indirectly but is not itself a physical characteristic of the property.

QUESTION NO. 36

Dual-rate capitalization is generally associated with valuation of:

OPTION 1: Freehold property
OPTION 2: Leasehold property
OPTION 3: Tenant-occupied property only
OPTION 4: Property under litigation

CORRECT ANSWER: OPTION 2 – Leasehold Property

EXPLANATION

The dual-rate method generally separates:

return on the investment; and
accumulation/recovery of capital.

It is particularly relevant in valuation of leasehold interests, where a wasting asset interest has to be considered.

QUESTION NO. 37

Which of the following does not properly represent an annuity?

OPTION 1: Interest on fixed deposit
OPTION 2: Yield on Government security
OPTION 3: Return on a one-year term fixed deposit
OPTION 4: Annual return on investment

CORRECT ANSWER: OPTION 3 – Return on a One-Year Term Fixed Deposit

EXPLANATION

An annuity generally involves a series of periodic payments/receipts over a period.

A single one-year return does not constitute a series of periodic payments and therefore does not properly represent an annuity.

QUESTION NO. 38

₹1 invested at 6% compound interest will accumulate to approximately what amount after four years?

OPTION 1: ₹0.982
OPTION 2: ₹1.263
OPTION 3: ₹1.350
OPTION 4: ₹1.500

CORRECT ANSWER: OPTION 2 – ₹1.263

CALCULATION

$A=P(1+r)n A=P(1+r)^n$ $A=1(1.06)4A=1(1.06)^4$ $A=1.26247696 A=1.26247696$

Therefore:

$A≈₹1.263 A\approx₹1.263$

QUESTION NO. 39

A fund formed by setting aside a recurring annual amount over a specified period to recoup capital invested in a landed property is called:

OPTION 1: Sinking fund
OPTION 2: Demolition fund
OPTION 3: Replacement fund
OPTION 4: Maintenance fund

CORRECT ANSWER: OPTION 1 – Sinking Fund

EXPLANATION

A sinking fund accumulates periodic contributions to replace or recover capital at the end of the economic/estimated life of an asset.

In building valuation it is particularly relevant in depreciation calculations.

QUESTION NO. 40

A proposed four-lane highway along a city’s suburban area is most likely to:

OPTION 1: Decrease supply of developable land
OPTION 2: Increase demand for land along the road
OPTION 3: Decrease demand for land
OPTION 4: Increase construction cost only

CORRECT ANSWER: OPTION 2

EXPLANATION

Improved accessibility and connectivity generally increase the attractiveness of land adjoining major transport infrastructure.

Potential effects include:

increased accessibility;
commercial development;
improved connectivity;
increased demand;
potential appreciation in land values.

The actual impact, however, depends on zoning, acquisition, access controls, environmental restrictions and other factors.

QUESTION NO. 41

Which factor can directly affect development potential and property value?

OPTION 1: Floor Space Index
OPTION 2: Ownership pattern
OPTION 3: Size and height of rooms
OPTION 4: Utility services inside a building

CORRECT ANSWER: OPTION 1 – Floor Space Index

EXPLANATION

FSI/FAR determines the permissible built-up floor area relative to plot area.

Higher permissible FSI can potentially increase development potential and consequently land value, subject to market demand and planning restrictions.

QUESTION NO. 42

Which is not an objective of a green-building code?

OPTION 1: Water conservation
OPTION 2: Energy efficiency
OPTION 3: Cost of construction
OPTION 4: Reduction of environmental impact

CORRECT ANSWER: OPTION 3 – Cost of Construction

EXPLANATION

Cost may be an important economic consideration in green construction, but it is not itself the environmental objective.

Typical objectives include:

energy efficiency;
water conservation;
waste reduction;
resource efficiency;
lower environmental impact.

QUESTION NO. 43

Which property is least suited to valuation purely through the income approach?

OPTION 1: Unoccupied property
OPTION 2: Owner-occupied property
OPTION 3: Building under construction
OPTION 4: Rent-fetching property

CORRECT ANSWER: OPTION 3 – Building Under Construction

EXPLANATION

The income capitalization approach is most directly applicable where the property generates or is capable of generating an identifiable income stream.

A building under construction generally requires consideration of:

cost;
development value;
residual value;
DCF;
market evidence,

depending upon the assignment.

QUESTION NO. 44

Which statement is not correct concerning wealth?

OPTION 1: Wealth may consist of material things
OPTION 2: Wealth consists of useful things owned by a person
OPTION 3: Property may represent a benefit/right associated with wealth
OPTION 4: All goods satisfying human wants are necessarily wealth

CORRECT ANSWER: OPTION 4

EXPLANATION

Not every object that satisfies a human want necessarily constitutes wealth in the economic sense.

Scarcity, utility, transferability/economic value and ownership characteristics are important considerations.

QUESTION NO. 45

If the unexpired period of a lease is extremely long, the present reversionary value of the freehold interest would generally become:

OPTION 1: Negative NPV
OPTION 2: Zero
OPTION 3: Negligible
OPTION 4: Less than zero

CORRECT ANSWER: OPTION 3 – Negligible

EXPLANATION

The reversionary value is received at the end of the lease term.

Its present value is:

$PV=FV(1+r)nPV=\frac{FV}{(1+r)^n}$

As $nn$ becomes very large, the present value approaches zero.

It may not mathematically become negative; rather, it becomes negligibly small.

QUESTION NO. 46

Which statement is not correct regarding surrender of lease?

OPTION 1: It may involve premature termination by lessee
OPTION 2: It can be unilaterally terminated by a lessee in appropriate circumstances
OPTION 3: It may occur with consent of lessor
OPTION 4: It can occur after expiry of lease

CORRECT ANSWER: OPTION 4

EXPLANATION

Surrender involves giving up an existing leasehold interest before its natural expiry, generally by mutual agreement or operation of law depending upon the circumstances.

Once the lease has already expired, there is ordinarily no subsisting lease to surrender.

PART E – INVESTMENT & VALUATION METHODS

QUESTION NO. 47

An investor purchases property for ₹1 crore and spends another ₹20 lakh on redevelopment. The total investment is ₹1.20 crore. The expected net operating income is ₹10 lakh. The unlevered yield is:

OPTION 1: 6.25%
OPTION 2: 8.33%
OPTION 3: 10.00%
OPTION 4: 12.00%

CORRECT ANSWER: OPTION 2 – 8.33%

CALCULATION

Total investment:

$₹1.00 crore+₹0.20 crore=₹1.20 crore$

NOI:

$₹10 lakh$

Yield:

$Yield=NOI / Total Investment\times100$ $=10 / 120\times100=$ $8.33%$

QUESTION NO. 48

A project requires an investment of ₹10 lakh and has an NPV of ₹16 lakh. What is its profitability index?

OPTION 1: 1.0
OPTION 2: 1.6
OPTION 3: 0.6
OPTION 4: 3.2

CORRECT ANSWER: OPTION 2 – 1.6

CALCULATION

Strictly, the Profitability Index (PI) is:

$PI=PV of future cash inflows / Initial Investment$

Since:

$NPV=PV of inflows-Initial Investment$

therefore:

$PV of inflows=16+10=₹26 lakh$

$PI=2610=2.6$

IMPORTANT CORRECTION

Therefore, none of the four supplied options is technically correct if ₹16 lakh is genuinely the NPV.

The source answer of 1.6 appears to treat ₹16 lakh as the present value of inflows rather than NPV.

EXAM-READY CONCLUSION:
If the question intends ₹16 lakh to mean PV of future inflows, the answer is 1.6. If it genuinely means NPV, the correct PI is 2.6.

This is an example where the source answer should not be reproduced without checking the underlying formula.

QUESTION NO. 49

Which approach is generally least suitable for a highly specialised property?

OPTION 1: Replacement cost
OPTION 2: Income expected from property
OPTION 3: Profit-producing capability
OPTION 4: Sales comparison

CORRECT ANSWER: OPTION 4 – Sales Comparison

EXPLANATION

Specialised properties often have:

limited market transactions;
unique design;
specialised utility;
limited comparable sales.

Therefore, sales comparison can be difficult to apply reliably.

Cost, income or profits methods may be more appropriate depending upon the property.

QUESTION NO. 50

For valuation of an immovable property under the market approach, the fundamental requirement is that the property should be:

OPTION 1: Investible
OPTION 2: Transferable
OPTION 3: Marketable
OPTION 4: Non-investible

CORRECT ANSWER: OPTION 3 – Marketable

EXPLANATION

The market approach relies upon market evidence.

For meaningful market comparison, there must be a sufficiently active and observable market in comparable assets.

QUESTION NO. 51

Sales comparison approach requires:

OPTION 1: Sufficient information from sales of similar properties
OPTION 2: Sufficient income from property
OPTION 3: Cost of acquisition data only
OPTION 4: Title information only

CORRECT ANSWER: OPTION 1

EXPLANATION

Comparable-sales valuation requires relevant transactions and adjustments for differences such as:

location;
size;
age;
condition;
frontage;
development potential;
time;
transaction characteristics.

QUESTION NO. 52

In an adjustment-grid model, weightages assigned to factors should preferably be based upon:

OPTION 1: Relative importance of factors to local market participants
OPTION 2: Relative importance to the valuer
OPTION 3: Valuer’s intuition alone
OPTION 4: Valuer’s desired final value

CORRECT ANSWER: OPTION 1

EXPLANATION

The adjustment process should reflect market behaviour, not personal preference of the valuer.

Therefore, the relative importance of attributes to market participants is the more defensible basis.

QUESTION NO. 53

Size, shape, plot area, frontage, depth, vista, orientation, soil and topography are:

OPTION 1: Legal factors
OPTION 2: Cultural factors
OPTION 3: Physical factors
OPTION 4: Economic factors

CORRECT ANSWER: OPTION 3 – Physical Factors

EXPLANATION

All these characteristics describe the physical attributes of land.

They can materially affect:

utility;
development potential;
accessibility;
marketability;
highest and best use;
value.

QUESTION NO. 54

The best method for estimating the value of a large parcel from sales of smaller plots, where subdivision is contemplated, is:

OPTION 1: Adjustment-grid method
OPTION 2: Hypothetical plotting method
OPTION 3: Hedonic sales method
OPTION 4: Belting method

CORRECT ANSWER: OPTION 2 – Hypothetical Plotting Method

EXPLANATION

Under hypothetical plotting, the large parcel is notionally subdivided into plots similar to those observed in market transactions.

The valuer then estimates:

number of saleable plots;
saleable area;
development costs;
time;
risk/profit;
resulting land value.

QUESTION NO. 55

In its simplest form, the residual method gives the maximum purchase price of a development site as:

OPTION 1: Expected value of completed development − development costs − allowance for risk/profit
OPTION 2: Expected income − development costs
OPTION 3: Development costs + profit
OPTION 4: Development costs + risk/profit

CORRECT ANSWER: OPTION 1

FORMULA

$Residual Land Value=GDV-Development Costs-Developer's Profit /Risk$

where GDV is the Gross Development Value.

Depending upon the sophistication of the exercise, finance cost, taxes, professional fees, marketing costs and time value of money may also need to be considered.

QUESTION NO. 56

A real-estate joint-venture agreement generally does not necessarily include which of the following as a core JV commercial term?

OPTION 1: Distribution of profits
OPTION 2: Capital contribution
OPTION 3: Management and control
OPTION 4: Insurance

CORRECT ANSWER: OPTION 4 – Insurance

EXPLANATION

Insurance may certainly be addressed in a JV agreement, but the fundamental commercial elements ordinarily include:

contribution;
ownership;
control;
development obligations;
distribution of profits;
exit mechanism.

Thus, in the context of the source question, Option 4 is the intended answer.

QUESTION NO. 57

Which valuation approach generally reflects the investment value generated by an income-producing immovable property?

OPTION 1: Income approach
OPTION 2: Cost approach
OPTION 3: Market approach
OPTION 4: Development approach

CORRECT ANSWER: OPTION 1 – Income Approach

EXPLANATION

The income approach capitalises the economic benefits expected from the property.

A simple capitalisation formula is:

$V=NOI / Capitalisation Rate$

It is particularly useful for:

rented commercial property;
offices;
shops;
income-producing buildings;
investment property.

QUESTION NO. 58

Bad workmanship in construction principally affects which type of life of a building?

OPTION 1: Economic life
OPTION 2: Life due to obsolescence
OPTION 3: Physical life
OPTION 4: Legal life

CORRECT ANSWER: OPTION 3 – Physical Life

EXPLANATION

Poor construction quality can shorten the physical serviceability of a structure.

Physical life relates to the period for which the building can physically remain serviceable with appropriate maintenance.

QUESTION NO. 59

A property becomes outdated because its planning and design are unsuitable for current user requirements. This is:

OPTION 1: Technological obsolescence
OPTION 2: Economic obsolescence
OPTION 3: Functional obsolescence
OPTION 4: Physical depreciation

CORRECT ANSWER: OPTION 3 – Functional Obsolescence

EXPLANATION

Functional obsolescence results from deficiencies in:

design;
layout;
utility;
configuration;
functionality.

For example, an old office building with inefficient floor layouts may suffer functional obsolescence despite being physically sound.

QUESTION NO. 60

In building valuation, depreciation represents reduction in:

OPTION 1: Price
OPTION 2: Value
OPTION 3: Worth
OPTION 4: Cost

CORRECT ANSWER: OPTION 2 – Value

EXPLANATION

Depreciation in valuation represents the reduction in value arising from factors such as:

physical deterioration;
functional obsolescence;
economic/external obsolescence.

It should not be mechanically equated with accounting depreciation in every valuation context.

QUESTION NO. 61

Reproduction cost under the cost approach generally represents the cost of constructing a replica using:

OPTION 1: No cost-inflation adjustment
OPTION 2: Same utility
OPTION 3: Different materials
OPTION 4: Same/similar materials and design

CORRECT ANSWER: OPTION 4

EXPLANATION

The distinction is important:

Reproduction cost: cost of constructing a replica/substantially identical structure using similar materials and design.

Replacement cost: cost of constructing a modern substitute providing equivalent utility, potentially using modern materials and technology.

QUESTION NO. 62

The approach in which prices paid for comparable assets are adjusted for differences from the subject property is:

OPTION 1: Depreciated replacement cost
OPTION 2: Discounted cash flow
OPTION 3: Rule-of-thumb method
OPTION 4: Sales comparison method

CORRECT ANSWER: OPTION 4 – Sales Comparison Method

EXPLANATION

The valuer starts with comparable transaction prices and makes appropriate adjustments for differences between the comparable and subject.

QUESTION NO. 63

Which approach-property combination is least practical?

OPTION 1: Income capitalization – house on lease
OPTION 2: Sales comparison – owner occupied property
OPTION 3: Cost approach – public school
OPTION 4: Income capitalization – owner-occupied bungalow

CORRECT ANSWER: OPTION 4

EXPLANATION

An owner-occupied bungalow may not generate an actual rental stream.

An income approach can sometimes be applied using hypothetical market rent, but it is generally less direct than market comparison or cost-based analysis.

PART F – INSURANCE, IND AS & PROFESSIONAL PRACTICE

QUESTION NO. 64

Upon notification of a potentially covered insurance claim, the insurer’s obligation includes:

OPTION 1: Defend the insurer
OPTION 2: Indemnify the insurer
OPTION 3: Investigate and settle every claim irrespective of coverage
OPTION 4: Determine whether the liability/damage is covered under the policy

CORRECT ANSWER: OPTION 4

EXPLANATION

Insurance claims must be examined against:

policy terms;
insured peril;
exclusions;
sum insured;
applicable conditions;
loss assessment.

The insurer does not automatically accept every notified claim.

QUESTION NO. 65

Which statement is not correct regarding fair value under Ind AS 113?

OPTION 1: Fair value represents an exit price rather than an entry price
OPTION 2: Fair value is market-based rather than entity-specific
OPTION 3: Highest and best use is relevant where applicable to non-financial assets
OPTION 4: Fair value measurement is adjusted for transaction costs

CORRECT ANSWER: OPTION 4

EXPLANATION

Ind AS 113 defines fair value essentially as a market-participant-based exit price.

Transaction costs are not a characteristic of the asset itself and are not included in the fair-value measurement.

This is an important examination distinction.

QUESTION NO. 66

A valuer may generally be invited to appear before a court as:

OPTION 1: Cross-examiner of the opposing valuer
OPTION 2: Examiner of the opposing valuer
OPTION 3: Questioner of the opposing advocate
OPTION 4: Expert witness

CORRECT ANSWER: OPTION 4 – Expert Witness

EXPLANATION

A professional valuer may assist the Court by giving expert opinion on technical valuation matters.

The valuer’s fundamental responsibility is to provide an independent and technically defensible opinion, rather than act as an advocate for the appointing party.

QUESTION NO. 67

Which is not an essential feature of a contract of sale?

OPTION 1: Two parties
OPTION 2: Sale of goods
OPTION 3: Consideration in terms of price
OPTION 4: Unconditional contract

CORRECT ANSWER: OPTION 4 – Unconditional Contract

EXPLANATION

A contract of sale may be subject to conditions.

Therefore, being unconditional is not an essential characteristic.

QUESTION NO. 68

Which peril is generally treated as an add-on cover under the standard fire insurance framework referred to in the question?

OPTION 1: Earthquake
OPTION 2: Aircraft damage
OPTION 3: Riots
OPTION 4: Storm

CORRECT ANSWER: OPTION 1 – Earthquake

EXPLANATION

The question reflects the conventional fire-policy framework in which earthquake cover may be taken as an additional extension.

Examination caution: Insurance policy wordings and regulatory frameworks can change; the applicable policy wording should always be checked in professional assignments.

QUESTION NO. 69

Where the amount insured is less than the value of machinery/property at risk, the loss may be adjusted under the:

OPTION 1: Sum insured
OPTION 2: Reinstatement value
OPTION 3: Condition of average
OPTION 4: Indemnity value

CORRECT ANSWER: OPTION 3 – Condition of Average

EXPLANATION

If a property is underinsured, the condition of average may proportionately reduce the amount payable.

A simplified formula is:

$Claim=Loss\timesSum Insured / Value at Risk$

subject to the applicable policy terms.

QUESTION NO. 70

Which activity is outside the normal professional scope of an independent valuer?

OPTION 1: Advising clients concerning property transactions
OPTION 2: Verification of revenue records
OPTION 3: Marketing the property to make it attractive to purchasers
OPTION 4: Appearing as an expert witness

CORRECT ANSWER: OPTION 3 – Marketing Work

EXPLANATION

A valuer’s role is to provide an independent valuation opinion.

Actively marketing a property for sale can compromise the independence and objectivity expected of the valuer.

QUESTION NO. 71

An asset is formally appraised and valued as on the:

OPTION 1: Verification date
OPTION 2: Valuation date
OPTION 3: Report date
OPTION 4: Effective date

CORRECT ANSWER: OPTION 2 – Valuation Date

EXPLANATION

The valuation date is the date as of which the value is determined.

It can differ from:

inspection date;
report date;
date of appointment.

This distinction is extremely important in bank valuation and litigation assignments.

QUESTION NO. 72

Which is an important requirement of a professional valuation report?

OPTION 1: Report without inspection in every case
OPTION 2: State whatever value is required by the client
OPTION 3: Report capable of withstanding professional/legal scrutiny and cross-examination
OPTION 4: Ignore valuation principles

CORRECT ANSWER: OPTION 3

EXPLANATION

A defensible valuation report should contain:

scope of work;
valuation date;
purpose;
assumptions;
documents relied upon;
inspection details;
methodology;
calculations;
limitations;
conclusion;
appropriate certification/disclosures.

The valuer must never manipulate the conclusion merely to satisfy the client.

QUESTION NO. 73

The Supreme Court observation concerning value being “unaffected by the special needs of a particular purchaser” is associated in the source with:

OPTION 1: R.C. Cooper v. Union of India (1970)
OPTION 2: CWT v. P.N. Sikand (1977)
OPTION 3: Wenger & Co. v. DVO (1978)
OPTION 4: Jawajee Nagnatham v. RDO (1994)

CORRECT ANSWER: OPTION 1 – R.C. Cooper v. Union of India

EXPLANATION

The principle is associated with the concept that market value is not determined merely by the special needs or subjective circumstances of a particular purchaser.

The case is therefore relevant to the fundamental distinction between objective market value and special purchaser value.

QUESTION NO. 74

In which case did the Supreme Court recognise that, when deriving the value of a large parcel from small-plot sale instances, an appropriate deduction/allowance may be made?

OPTION 1: Chimanlal Hargovinddas v. Special Land Acquisition Officer (1988)
OPTION 2: CED v. Radhadevi Jalan (1968)
OPTION 3: CIT v. Ashima Sinha (1979)
OPTION 4: CIT v. Anupkumar Kapoor (1980)

CORRECT ANSWER: OPTION 1 – Chimanlal Hargovinddas

EXPLANATION

Large parcels generally cannot automatically be valued at the same rate as small developed plots.

A deduction may be required for factors such as:

development;
roads;
open spaces;
plotting;
infrastructure;
time;
saleability;
development risk.

The precise percentage must be determined from the facts and circumstances rather than mechanically applying a fixed percentage.

CASE STUDY I

DEPRECIATION & LAND/BUILDING VALUATION

The following questions are based on the case study contained in the uploaded paper. The source describes a 1,000 sq. m. plot, a bungalow with 300 sq. m. ground-floor area and 100 sq. m. first-floor area, current replacement cost of ₹30,000/sq. m., current land rate of ₹60,000/sq. m., age 30 years and total life 60 years.

QUESTION NO. 75

What is the depreciation amount of the bungalow using the straight-line method, assuming 10% scrap value?

OPTION 1: ₹60,00,000
OPTION 2: ₹54,00,000
OPTION 3: ₹45,00,000
OPTION 4: ₹12,00,000

CORRECT ANSWER: OPTION 2 – ₹54,00,000

DETAILED CALCULATION

Total built-up area:

$300+100=400 m2$

Replacement cost:

$400\times₹30,000=₹1,20,00,000$

Scrap value:

$10%\times1.20 crore=₹12,00,000$

Depreciable amount:

$₹1,20,00,000-₹12,00,000=₹1,08,00,000$

Age/total life:

$3060=50%$

Depreciation:

$₹1,08,00,000\times50%=₹54,00,000$

Therefore:

OPTION 2 is correct.

QUESTION NO. 76

What would be the depreciation under the constant-percentage method?

OPTION 1: ₹54,00,000
OPTION 2: ₹47,37,600
OPTION 3: ₹60,00,000
OPTION 4: ₹54,46,000

CORRECT ANSWER: NONE OF THE OPTIONS, IF THE STANDARD CONSTANT-PERCENTAGE FORMULA IS APPLIED

DETAILED SOLUTION

Under the constant-percentage method:

$S=C(1-r)^n$

where:

$CC$ = original/replacement cost
$SS$ = scrap value
$nn$ = useful life
$rr$ = annual depreciation rate.

Here:

$SC=10%=0.10$

Thus:

$(1-r)60=0.10$

Therefore:

$1-r=(0.10)1/60$

which gives approximately:

$r\approx3.69%$

After 30 years:

$V=1.20 crore(1-r)30$

Since:

$(1−r)60=0.10(1-r)^{60}=0.10$

then:

$(1-r)30=0.10\approx0.31623$

Thus remaining value:

$₹1.20 crore\times0.31623\approx₹37.95 lakh$

Depreciation:

$₹120-₹37.95\approx₹82.05 lakh$

IMPORTANT

The answer printed in the supplied paper, ₹47,37,600, does not reconcile with the standard constant-percentage depreciation calculation based on the facts supplied.

Therefore, for an independently verified mock test, this question should be rewritten rather than retaining a mathematically unsupported answer.

QUESTION NO. 77

What is the present market value of the land?

OPTION 1: ₹2.40 crore
OPTION 2: ₹6.00 crore
OPTION 3: ₹4.80 crore
OPTION 4: ₹4.10 crore

CORRECT ANSWER: OPTION 2 – ₹6.00 CRORE

CALCULATION

Plot area:

$1,000 m21,000\,m^2$

Current land rate:

$₹60,000/m^2$

Therefore:

$1,000\times60,000=₹60,000,000$ $=₹6.00 crore$

QUESTION NO. 78

Using the straight-line depreciation result, what is the indicated total market value of the property?

OPTION 1: ₹6.00 crore
OPTION 2: ₹6.66 crore
OPTION 3: ₹6.12 crore
OPTION 4: ₹5.661 crore

CORRECT ANSWER: NONE OF THE ABOVE; ₹6.54 CRORE

CALCULATION

Land:

$₹6.00 crore$

Building replacement cost:

$₹1.20 crore$

Straight-line depreciation:

$₹0.54 crore$

Depreciated building value:

$₹1.20-₹0.54=₹0.66 crore$

Total:

$₹6.00+₹0.66=₹6.66 crore$

CORRECTION

On the stated facts, ₹6.66 crore is actually the mathematically consistent answer.

Thus:

OPTION 2 – ₹6.66 crore is correct.

QUESTION NO. 79

What is the balance economic life of the building?

OPTION 1: 60 years
OPTION 2: 30 years
OPTION 3: 15 years
OPTION 4: 45 years

CORRECT ANSWER: OPTION 2 – 30 YEARS

CALCULATION

Total life:

$60 years60\ years$

Age:

$30 years30\ years$

Balance life:

$60−30=30 years60-30=30\ years$

QUESTION NO. 80

Which factor would not ordinarily be ignored in estimating present market value of the property?

OPTION 1: Depreciation
OPTION 2: Current replacement cost
OPTION 3: Economic obsolescence
OPTION 4: Current land rate

CORRECT ANSWER: OPTION 3 – ECONOMIC OBSOLESCENCE

EXPLANATION

The question asks which factor will not be considered.

Economic/external obsolescence can affect value where the property is adversely affected by external factors such as:

environmental conditions;
neighbourhood deterioration;
changes in demand;
adverse infrastructure;
regulatory restrictions.

Therefore, if the question is strictly about the provided case and no evidence of economic obsolescence is given, it may not be quantified.

EXAM POINT:
Absence of evidence does not mean economic obsolescence can never exist; it means the valuer should not make an unsupported deduction.

CASE STUDY II – INCOME & COST APPROACH

The second case study states that the property comprises approximately 350 m² land and a 300 m² bungalow, with 30 years having elapsed, future economic life of 40 years, land rate ₹8,000/m², replacement cost ₹15,000/m² and total outgoings of 15% of gross rent.

QUESTION NO. 81

What is the depreciation percentage of the bungalow using the sinking-fund approach indicated in the question?

OPTION 1: 42.86%
OPTION 2: 11.29%
OPTION 3: 15.30%
OPTION 4: Zero

CORRECT ANSWER: OPTION 2 – 11.29%

CALCULATION

The source supplies:

$Sinking fund factor=0.0017$

and:

$Annuity factor=66.439$

Therefore:

$Depreciation percentage=0.0017\times66.439$

or approximately:

$11.29%$

QUESTION NO. 82

What is the depreciated replacement cost of the bungalow?

OPTION 1: ₹39,91,950
OPTION 2: ₹38,11,500
OPTION 3: ₹35,12,250
OPTION 4: ₹45,00,000

CORRECT ANSWER: OPTION 1 – ₹39,91,950

CALCULATION

Replacement cost:

$300\times₹15,000=₹45,00,000$

Depreciation:

$11.29%$

Remaining value:

$100-11.29=88.71%$

Therefore:

$₹45,00,000\times88.71%$ $≈₹39,91,950\$

Hence Option 1.

QUESTION NO. 83

What is the insurable/reinstatement value of the bungalow?

OPTION 1: ₹39,91,950
OPTION 2: ₹45,00,000
OPTION 3: ₹65,00,000
OPTION 4: ₹38,11,500

CORRECT ANSWER: OPTION 2 – ₹45,00,000

EXPLANATION

For a reinstatement value assessment, the objective is generally to determine the cost of reinstating/replacing the building, rather than its depreciated market value.

Thus:

$300\times₹15,000=₹45,00,000$

Depreciation is relevant to depreciated replacement cost but is not necessarily deducted from reinstatement value under a reinstatement policy.

QUESTION NO. 84

What is the market value of the property by the income approach?

OPTION 1: ₹66,66,000
OPTION 2: ₹56,66,000
OPTION 3: ₹55,00,000
OPTION 4: ₹50,00,000

CORRECT ANSWER: OPTION 2 – ₹56,66,000

CALCULATION

Gross annual rent:

$₹2,00,000₹2,00,000$

Outgoings:

$15%\times2,00,000=₹30,000$

Net annual income:

$₹2,00,000-₹30,000=₹1,70,000$

Years’ Purchase at 3% perpetuity:

$YP=10.03=33.33$

Therefore:

$Value=₹1,70,000\times33.33$ $≈₹56,66,100\approx$

Thus:

Option 2 – ₹56.66 lakh.

CASE STUDY III – CAPITAL GAINS / INDEXATION

The third case study concerns a flat received by gift, acquired by the father in 1982 for ₹70,000, improved in 1989 for ₹50,000 and sold in 1997 for ₹15,50,000. The source supplies index numbers of 109 for 1982, 172 for 1989 and 305 for 1997.

QUESTION NO. 85

What is the indexed cost of improvement in 1997?

OPTION 1: ₹50,000
OPTION 2: ₹1,20,000
OPTION 3: ₹2,45,872
OPTION 4: ₹88,662

CORRECT ANSWER: OPTION 4 – APPROX. ₹88,662

CALCULATION

Formula:

$Indexed Cost=Original Cost\timesCIIyear of sale /CII year of improvement$

Therefore:

$₹50,000\times305172$ $=₹88,662.79$

Approximately:

$₹88,663$

Hence Option 4.

QUESTION NO. 86

What is the net capital gain?

OPTION 1: ₹12,35,466
OPTION 2: ₹9,45,466
OPTION 3: ₹2,84,534
OPTION 4: ₹14,30,000

CORRECT ANSWER: THE SOURCE QUESTION REQUIRES CLARIFICATION

DETAILED ANALYSIS

The problem involves a property received by gift. Under the applicable tax framework represented by the question, the cost to the previous owner can become relevant for determining cost of acquisition, subject to the statutory rules applicable to the relevant period.

Indexed cost of the father’s 1982 acquisition:

$₹70,000\times305109$ $≈₹1,95,872\approx$

Indexed improvement:

$₹50,000\times305172$ $≈₹88,663\approx$

Total indexed cost:

$₹1,95,872+₹88,663$ $=₹2,84,535 approximately$

Sale consideration:

$₹15,50,000$

Less transfer expenses:

$₹10,000+₹20,000=₹30,000$

Net sale consideration:

$₹15,50,000-₹30,000=₹15,20,000$

Approximate capital gain:

$₹15,20,000-₹2,84,535$ $=₹12,35,465$

Therefore:

OPTION 1 – approximately ₹12,35,466

is consistent with the source answer provided the previous owner’s indexed acquisition cost is included as above.

QUESTION NO. 87

If the capital-gains tax rate is 20%, what is the tax payable on the net capital gain calculated above?

OPTION 1: ₹2,47,093
OPTION 2: ₹3,10,000
OPTION 3: ₹56,906
OPTION 4: ₹3,04,000

CORRECT ANSWER: OPTION 1 – APPROX. ₹2,47,093

CALCULATION

Net capital gain:

$₹12,35,466$

Tax rate:

$20%$

Therefore:

$₹12,35,466\times20%$ $=₹2,47,093.20$

Thus:

OPTION 1 – ₹2,47,093

LAND & BUILDING VALUER EXAMINATION

MOCK TEST – 1

MOCK TEST WITH CORRECT ANSWERS & EXPLANATIONS

IMPORTANT CEV GROUP EXAMINATION NOTE

1. Do not memorise the printed answer key blindly.

2. Particularly verify numerical questions.

3. Distinguish valuation concepts carefully.

4. Always identify the valuation date.

5. For land valuation, always consider highest and best use.

CEV GROUP

LAND & BUILDING VALUER EXAMINATION

MOCK TEST – 1

Revised Syllabus – Effective from 21 August 2026

PART A – ECONOMICS, ACCOUNTING & BASIC CONCEPTS

QUESTION NO. 1

DETAILED SOLUTION & EXPLANATION

Ed=% Change in Quantity Demanded/% Change in Price

Ed=1

QUESTION NO. 2

DETAILED SOLUTION & EXPLANATION

QUESTION NO. 3

EXPLANATION

QUESTION NO. 4

EXPLANATION

MV=PYMV=PY

QUESTION NO. 5

DETAILED CALCULATION

Y=₹30,000Y=₹30,000

C=₹10,000C=₹10,000

S=Y−CS=Y-C S=30,000−10,000=₹20,000S=30,000-10,000=₹20,000

APS=SYAPS=\frac{S}{Y} APS=20,00030,000=0.6667APS=\frac{20,000}{30,000}=0.6667

APS=0.67APS=0.67

QUESTION NO. 6

EXPLANATION

QUESTION NO. 7

EXPLANATION

QUESTION NO. 8

EXPLANATION

QUESTION NO. 9

FORMULA

Contribution per unit=Selling Price−Variable Cost per unitContribution\ per\ unit=Selling\ Price-Variable\ Cost\ per\ unit

PART B – LAW & REGULATORY FRAMEWORK

QUESTION NO. 10

EXPLANATION

QUESTION NO. 11

EXPLANATION

QUESTION NO. 12

EXPLANATION

QUESTION NO. 13

EXPLANATION

QUESTION NO. 14

EXPLANATION

QUESTION NO. 15

EXPLANATION

QUESTION NO. 16

EXPLANATION

QUESTION NO. 17

EXPLANATION

QUESTION NO. 18

EXPLANATION

PART C – STATISTICS, ENVIRONMENT & ETHICS

QUESTION NO. 19

EXPLANATION

Xˉw=∑WX∑W\bar X_w=\frac{\sum WX}{\sum W}

QUESTION NO. 20

EXPLANATION

QUESTION NO. 21

EXPLANATION

QUESTION NO. 22

EXPLANATION

QUESTION NO. 23

EXPLANATION

QUESTION NO. 24

EXPLANATION

QUESTION NO. 25

EXPLANATION

QUESTION NO. 26

EXPLANATION

PART D – LAND, PROPERTY LAW & VALUATION PRINCIPLES

QUESTION NO. 27

$Ed=% Change in Quantity Demanded/% Change in Price$

$Ed=1$

$MV=PYMV=PY$

$Y=₹30,000Y=₹30,000$

$C=₹10,000C=₹10,000$

$S=Y-CS=Y-C$ $S=30,000-10,000=₹20,000S=30,000-10,000=₹20,000$

$APS=SYAPS=\frac{S}{Y}$ $APS=20,00030,000=0.6667APS=\frac{20,000}{30,000}=0.6667$

$APS=0.67APS=0.67$

$Contribution per unit=Selling Price−Variable Cost per unitContribution\ per\ unit=Selling\ Price-Variable\ Cost\ per\ unit$

$Xˉw=∑WX∑W\bar X_w=\frac{\sum WX}{\sum W}$

$A=P(1+r)n A=P(1+r)^n$ $A=1(1.06)4A=1(1.06)^4$ $A=1.26247696 A=1.26247696$

$A≈₹1.263 A\approx₹1.263$

$PV=FV(1+r)nPV=\frac{FV}{(1+r)^n}$

$₹1.00 crore+₹0.20 crore=₹1.20 crore$

$₹10 lakh$

$Yield=NOI / Total Investment\times100$ $=10 / 120\times100=$ $8.33%$

$PI=PV of future cash inflows / Initial Investment$

$NPV=PV of inflows-Initial Investment$

$PV of inflows=16+10=₹26 lakh$

$PI=2610=2.6$