In determining a property's before-tax cash flow from operations (BTCF) and net operating income (NOI), it is important to understand how each accounts for the use of financial leverage in its calculation. Which of the following statements is true in regards to how these two measures account for the use of financial leverage?
A. BTCF and NOI are both levered cash flows
B. BTCF is an unlevered cash flow, while NOI is a levered cash flow
C. BTCF is a levered cash flow, while NOI is an unlevered cash flow
D. BTCF and NOI are both unlevered cash flows
C

The key to meaningful valuations in real estate is to use defensible cash flow estimates. All of the following statements are true in regards to generating accurate cash flow estimates EXCEPT:
A. Investors should include only those sources of income and expenses that relate directly to the income producing ability of the property.
B. Investors should only consider recent events, rather than long-term trends when evaluating revenue and expense items.
C. Investors should obtain information about comparable properties whenever possible.
D. Investors should take into consideration local zoning, land use, and environmental controls that may impact the future flow of funds.