Argus Certification PRACTICE QUESTIONS | ACCURATE AND VERIFIED FOR GUARANTEED PASS, Exams of Finance

Download Argus Certification PRACTICE QUESTIONS | ACCURATE AND VERIFIED FOR GUARANTEED PASS and more Exams Finance in PDF only on Docsity! Argus Certification PRACTICE QUESTIONS | ACCURATE AND VERIFIED FOR GUARANTEED PASS | GUARANTEED PASS| LATEST UPDATE|2024-2025 WITH 200 QUESTIONS Expense Amount on Cash Flow Formula - ANSWER (expense amount X %fixed) + (expense amount X %variable X %occupied) Varies Window - ANSWER where to enter revenues or expenses that start and stop at specific times or change during the analysis period Copy Column to End - ANSWER to copy the selected year in the varies window to each year after. Used with variable revenues/expenses Sub-Line Expenses - ANSWER an expense that can be compromised of any number of additional expenses. (ex: CAM includes interior and exterior). Helpful when sub-expenses are different values Limits - ANSWER provide the ability to set a lower or upper limit on the projected expense amount. If the projected expense is less than the inflated lower limit or greater than the inflated upper limit, it will be overridden Capital Expenses - ANSWER expenses that are not considered part of a property's NOI and appear below the income line on the cash flow (ex: structural or capital reserves, building repairs, or improvements) Report Dock - ANSWER undock the reports so they can be displayed on a separate monitor Property Reports - ANSWER access the cash flow, cash flow as of, executive summary, assumptions, market leasing summary, budget comparison, month and year-to-date variance, and sources and uses reports Property Reports-cash flow: "Report For" - ANSWER Once a view is created you can - ANSWER toggle between all views available Custom Global View - ANSWER can be created and saved to be used from one session to the next -allows users to hide entire input tabs, individual columns or bands inside the tabs that are not needed Active field Tenant Rent Roll - ANSWER allows a user to enable or disable a tenant. If "Yes" the record will be included in calculations, if "No" it will be excluded Free rent included - ANSWER base rent, step rent and CPI rent - ANSWER Ignores the market leasing profile and will insert a new CONTRACT lease line in the Rent Roll. Select only if the specific rent and parameters of the option term are known Upon Expiration: Month to Month - ANSWER Ignores the market leasing profile and will insert a new speculative lease line into the rent roll. This option can be used after a lease expires and a tenant needs to occupy the space for only a few more months before vacating Upon Expiration: Holdover - ANSWER Ignores the market leasing profile and will insert a new speculative lease line into the rent roll. A holdover tenant is a renter who remains in a property after the lease expiration. If the landlord continues to accept rent payments, the holdover tenant can legally occupy the property. State laws determine how long the holdover tenants rental term is if the landlord accepts payment Base Rent calculation - ANSWER (renewal base rent * %renewal probability) + (new base rent * %new lease probability) New Base Rent - ANSWER the rate that a tenant new to the building would be expected to pay -inflates with MARKET inflation rate Renewal Base Rent - ANSWER the rate that an existing tenant is projected to pay upon renewal of their current lease -inflates with MARKET inflation rate Upon Expiration – ANSWER allows us to select any overrides for the NEXT term or what assumptions we want to use once the first market leasing term is over Property Purchase - ANSWER optional information used to calculated cash on cash metrics and returns like IRR Property Purchase: Costs - ANSWER allows a user to enter multiple closing costs as an amount or a percentage of the total purchase price debt is automatically included in the ____ section if debt has been previously entered - ANSWER Less Debt Debt Financing - ANSWER used to model an unlimited number of existing or prospective loans. This information is used to calculate debt service payments as well as certain metrics and returns such as LTV and debt coverage ratios Other Debt - ANSWER use if debt note was calculated outside of AE. You can add in the payment amount and date when it needs to be paid. The results would be displayed under the Debt Services section on the cash flow report Debt financing "seniority" field - ANSWER type a number between 1 and 30 to assign priority to a debt. The same number can be applied to multiple loans Debt financing "amortize start" - ANSWER allows a user to enter either the number of months after loan start date or a specific date in which a loan will start amortizing. If "0" is entered, the loan will pay interest and principal from the start Balloon Payment - ANSWER A balloon payment mortgage is a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size Take Out Loan - ANSWER Long-term loans replace interim financing, such as a short-term construction loan; they are usually mortgages with fixed payments that are amortizing Sensitivity Interval: Cap Rate Interval - ANSWER adjust the cap rate up or down in percentage steps. Default is 0.5%. Adjustment applies to properties that have one of the NOI options as the resale calculation method Sensitivity Analysis: Resale Amount Interval - ANSWER adjust the resale amount up or down in percentage steps. Default is 0.5%. Adjustments apply to properties that have one of the following options in the amount field: Inflate Purchase Price, Enter Sale Price, or $/Building Area Sensitivity Analysis: Gross Income Multiplier Interval - ANSWER adjust the gross income multiplier amount up or down in percentage steps. Default is 0.25% . Adjustments apply to properties that use the gross income multiplier option as the resale calculation method Sensitivity Analysis: Purchase Price Interval - ANSWER type the purchase price interval for all resale calculation methods. The default is $50,000 Sensitivity Analysis: Discount Rate Interval - ANSWER Type the discount rate interval. The default is 0.5% Sensitivity Analysis: IRR Target - ANSWER Type the IRR target. The default is 10%. This target can be seen in the valuation reports- resale matrix Acquisition Costs (DCF) - ANSWER a user can reduce DCF valuation results by acquisition (purchaser) costs based on a percentage of gross valuation, net valuation or a currency amount when to use fixed step field - ANSWER if the step increase is to occur every lease anniversary at the same step amount. (if the steps are to occur on diff dates or at different amts use the ellipsis on base rent) Base year stop - ANSWER tenant pays net share of all expenses (insurance, taxes and maintenance) over a stop amount to change reporting options from annually to monthly - ANSWER Click report (in ribbon), report options. Then change the "Print Interval" to monthly to view reports on monthly basis. Default start to market leasing profiles - ANSWER "Round Market Leases to start on the first day of the month" A user can change the start date of market leasing profiles to be one day after a previous lease expires under __ - ANSWER Modeling Practices- General Tab. This option only modifies leases that terminate in the middle of the month base year stop -1 - ANSWER use expenses from the previous year to calculate the stop, instead of this years expenses Speculative Lease Status - ANSWER next tenant is moving into a space that is open at the analysis date but are still in lease negotiations (aka no signed contract) available date vs start date - ANSWER available date is the date the space becomes vacant or available. the start date is the day the lease commences and a tenant fills the space if available date and start date differ: - ANSWER an available date that is different from tenant start date will result in absorption & turnover vacancy being reported in the months prior to the lease start date. this vacancy may affect the effective gross revenue line item and will lower Base Rental Revenue because the space is losing potential rent. ex: if available date is 2 months prior to start date, there will be 2 months of absorption and turnover vacancy when using the same available and start date: - ANSWER AE will not report any absorption & turnover vacancy. The program assumes the space is not available, so not potential rent is shown Percentage Rent - ANSWER a form of rent paid in addition to, or in lieu of, Base Rent. It is almost exclusively for retail tenants and is based upon a percentage of the tenants projected sales volume, with or without a breakpoint Percentage Rent- Sales Amount Unit - ANSWER Continue Prior: sales amount projections for rollover terms will be based on the input in the tenant record Amount Per Square Unit: sales amount will be based on a rate per unit of area Annual Amount: sales amount will be entered as a currency amount per year Percentage Rent- breakpoint - ANSWER Continue Prior: the methods in effect at the end of the prior lease will be used for each of the subsequent market leasing terms. Natural Breakpoint: if a retail tenant has a natural breakpoint, percentage rent is calculated only after the natural breakpoint is reached. Zero Breakpoint: percentage rent is calculated on total sales Annual Amount: enter the breakpoint amount over which percentage rent will be paid Amount/Area: enter the breakpoint amount/area over which percentage rent will be paid Breakpoint - ANSWER the breakpoint is the sales amount that must be achieved prior to the payment of any percentage rent. The overage percentage will only be applied to sales that exceed the breakpoint Natural Breakpoint Calculation - ANSWER base rent amount/the percentage applied to the sales amount Calculating tenant's percentage rent - ANSWER 1. Calculate Natural Breakpoint (baserent/%sales) 2. Sales Amount- natural breakpoint 3. multiply by % sales to get percentage rent Property Reports- Market Leasing Summary - ANSWER this report shows all the market leasing data for all the Market Leasing profiles that exist in a property model. Allows for easy ability to compare market profiles across the same inputs Option Lease - ANSWER when a want has an option to renew you need to enter "Option" under "Rent Roll Upon Expiration" This will create an additional lease record to represent a renewal option that is linked to the base tenant lease, then terms of the option are then modeled on the Rent Roll like other leases When using % of market with an option lease, AE will use - ANSWER only the renewal market rates for the Base Rent Reabsorb Lease - ANSWER no renewal occurs, the space remains vacant unless leased separately on the rent roll or space absorption window Space Absorption - ANSWER General Vacancy - ANSWER used to enter the stabilized vacancy rate for the property. It represents the minimum vacant loss for the property on a monthly or annual basis Market- General Vacancy - ANSWER Annual Amount: inflation can be applied to this value by selecting the ellipsis and entering a custom inflation rate % of Potential Gross Rev: Total Tenant Revenue + Total Other Income % of Total Rental Rev: Scheduled Base Rent + CPI Increases % of Total Tenant Rev: Total Rental Revenue + Total Other Tenant Revenue the general vacancy frequency can be calculated - ANSWER annually or monthly Recoveries- Net - ANSWER all recoverable expenses are paid by the tenant based on their proportionate share of the building area Recoveries- Base Year Stop - ANSWER all recoverable expenses are paid by the tenant based on their proportionate share of the building area over a stop amount,which is the amount of annual recoverable expenses in the base year, or first year of the lease Manage Currencies - ANSWER set the currency Manage Interest Rates - ANSWER to set up loan IR and project cash flow and returns after debt, various interest rates, swaps and refinancing scenarios Creating New Portfolio - ANSWER any changes made to a portfolio will be saved. Once the initial portfolio has been created, duplicate that and make changes to the copy property asset types ___ be changed after a property has been created - ANSWER can the Analysis Begin date defaults to - ANSWER the current month and year Property Asset Information includes - ANSWER Name, Analysis Begin, Analysis Years, Currency and Address Portfolio Application Tabs - ANSWER When a property is first created, it will open in ____ mode - ANSWER Edit Reports and inputs screens - ANSWER can be viewed at the same time Save Property - ANSWER saves the updates to the property asset model to the database. If a calculation has been performed, it will save the latest calculation results. Saves as .avux extension Save Property As - ANSWER will save a new version of the selected property asset Save Property to File - ANSWER saves an .avux file without saving to the database Check In/Check Out Property - ANSWER use to restrict who can edit them Discard Changes - ANSWER discards any changes you have made since the last save Ground Leases - ANSWER -properties sub tab to adjust market assumptions for a Ground Lease, model valuation or DCF Units - ANSWER -properties sub tab allows user to track inventory, forecast property unit CF's, model renewal scenarios for tenants, and extract data needed for stacking plans Actuals - ANSWER where we can import or manually enter actual expenses incurred by the property Classifications - ANSWER add classifications to group assets that share similar values Inflation Tab - ANSWER -market tab enter the default inflation rates to be used in each section. Inflation rates are applied annually based on the Analysis Begin date How to enter inflation rates - ANSWER as a percentage -1.5% should be entered as 1.5 or 1.5% not as .0015 revenues tab - ANSWER includes miscellaneous, parking and storage tabs revenues- miscellaneous - ANSWER where you can enter all non-tenant related revenue (ex: roof antenna) How Input - ANSWER Expenses tab - ANSWER where all reimbursable and non-reimbursable operating expenses are entered Common reimbursable expenses - ANSWER CAM, Taxes, Insurance, Repairs reimbursable expenses - ANSWER expenses that the property owner will recover from the tenant non-operating expenses - ANSWER fall below Net Operating Income line on the cash flow. Will not be counted toward the value of the property Once a Property Asset Type is selected it cannot be changed (T/F) - ANSWER False The Analysis Begin date defaults to the current Month and Year (T/F) - ANSWER True Which of the following is a classification type in AE? Select all that apply. a. Property b. Tenant c. Region d. Lease - ANSWER a. Property b. Tenant Multiple properties can be opened simultaneously in ARGUS Enterprise (T/F) - ANSWER True What is the extension of a property asset file in ARGUS Enterprise? a. .sf b. .avux c. .aeex d. .aeix - ANSWER b. avux To take a property out of read-only mode, the ______________ button must be selected from the Ribbon. Stop Amount - ANSWER Enter the building stop amount. Tenants for whom you select this method will reimburse all recoverable expenses over the building stop amount entered based on their proportionate share of the building area. Stop Amount/Area - ANSWER Enter the building stop amount/area. Tenants for whom you select this method will reimburse all recoverable expenses over the building stop amount/area entered based on their proportionate share of the building area. Fixed Amount - ANSWER Enter the annual recovery amount that will be paid by the tenant each year. The fixed amount can be a single amount or it can vary over time. The fixed amount is a tenant amount not a building amount. Fixed Amount/Area - ANSWER Enter the annual amount/area recovery that will be paid by the tenant each year. The fixed amount/area can be a single amount or it can vary over time. The rate entered varies according the amount of area under lease, not according to the entire building area. None - ANSWER No recoveries will be calculated for the tenant. Market - ANSWER Select the tenants to be included in the Market calculation. Base Year Stop +1 - ANSWER Expense stop will be established by the amount of recoverable expenses in the recovery year following the year the lease begins. Note if you select this method and the lease year is before the analysis start date, yet within the first recovery year, then the expense stop will be set to equal the recoveries from the second recovery year. If you select this method and the lease year is before the analysis start date and prior to the start of the first recovery year, then the expense stop will be set in the same manner as the existing base year stop. Base Year Stop -1 - ANSWER Expense stop will be established by the amount of recoverable expenses in the recovery year prior to year the lease begins. If you select this method and the lease begins before the analysis, the expense stop will be set in the same manner as the existing base year stop recovery method. If you select this method and the lease begins during the first analysis year yet after the start of the second recovery year, the expense stop will be established by the recoverable expenses that occur within the first recovery year. User Recovery Structures - ANSWER You can also create user-constructed recovery structures. These provide you with the ability to create custom recovery structures which apply different recovery methods to individual expenses or expense groups. This flexibility allows you to model virtually any recovery structure you might encounter in a commercial real estate lease contract. Market (Upon Expiration) - ANSWER Renewal processed based on the renewal probability in the Market Leasing profile (weighted average calculations of new and renewal rates for market rents, TI's, LC's etc.) Reabsorb - ANSWER All income for the space will cease when the initial lease term expires. In other words the space "goes dark" and does not lease again. This allows the space to be "reabsorbed" or re- leased either in full or in smaller sections Renew - ANSWER Assumes a 100% renewal probability for the current renewal period. A new speculative lease is created based on the renewal market entries in the Market Leasing profile. Vacate - ANSWER Assumes a 0% renewal probability for the current renewal period. A new speculative lease is created based on the new market entries in the Market Leasing profile. Option - ANSWER AE will entirely ignore the Market Leasing profile, and will insert a new speculative lease line into the Rent Roll. Select Option only if specific rent and parameters of the option term are known. Contract Renewal - ANSWER AE will ignore the Market Leasing profile, and will insert a new contract lease into the Rent Roll. Select Contract Renewal if the specific rent and parameters of the renewal are known. Month to Month - ANSWER AE will ignore the Market Leasing profile, and will insert a new speculative lease line into the Rent Roll. This option can be used after a lease expires and a tenant needs to occupy the space for only a couple more months before vacating. Holdover - ANSWER AE will ignore the Market Leasing profile, and will insert a new speculative lease line into the rent roll. A holdover tenant is a renter who remains in a property after the expiration of the lease. If the landlord continues to accept rent payments, the holdover tenant can continue to legally occupy the property. State laws and court rulings determine how long the holdover tenant's new rental term is if the landlord accepts rent. Lease Type: Contract v. Speculative - ANSWER Contract: The tenant is under contract and occupies space in the building. Speculative: The tenant is not currently in the building Custom Lease Status: This option includes any custom lease statuses you have created. Breakpoint - ANSWER The sales amount which must be achieved prior to the payment of any percentage rent. Natural Breakpoint - ANSWER If you select this option, the percentage rent will be calculated based on the natural breakpoint. The natural breakpoint is the result of adding base rent, step rent, and CPI. Zero Breakpoint - ANSWER If you select this option, percentage rent will be calculated based on total sales volume. Absorption Months v. Months Between Leases - ANSWER Input one, AE will calculate the other What must be subtracted out to calculate leasing commission? - ANSWER Free Rent True or False: ARGUS Enterprise merges three industry standard solutions: ARGUS Valuation- DCF, ARGUS Asset Management, and ARGUS Valuation-Capitalisation - ANSWER True In ARGUS Enterprise you can utilize shortcut keyboard commands to navigate within certain sections of the program. - ANSWER True In AE, a user can add over 100 properties into a portfolio. - ANSWER True Which is a benefit to utilizing a Chart of Accounts? a) Easier to track Revenues/Expenses b) Standardizes portfolio for names of all Expenses/Revenues c) Helps with accounting system integration If 12% is a desired return, enter 12% in the ________________ parent tab. - ANSWER Valuation What will LB Corporation pay for reimbursements in 2016 if 2016 is the base year in a base year stop structure? - ANSWER $0 What will LB Corporation pay for reimbursements in 2017? - ANSWER The amount of 2017 total operating expenses over 2016 total operating expenses What will LB Corporation pay for reimbursements in 2018? - ANSWER The amount of 2018 total operating expenses over 2016 total operating expenses If a tenant's space is available, but sitting vacant before they move in and you want to show that vacancy on reports, what do you need to enter in for the Lease dates? - ANSWER The Available Date needs to be when the space is actually available and the Start Date needs to be when the tenant's lease begins. True or False: Step Rent increases can be applied in the Step Rent field or in the Base Rent varies window. - ANSWER True Assuming a sale date of December 2020, what will be the net proceeds from sale if we have a resale calculation that capitalizes the NOI 12 months after sale? - ANSWER (2021 NOI / 10% Cap Rate)*(1.0 - 3% adjustment) Assuming a sale date of December 2020, what will be the net proceeds from sale if we have a resale calculation that capitalises the NOI of the sale year? - ANSWER (202 NOI / 10% Cap Rate)*(1.0 - 3% adjustment) When using an Available date that is before the Start date, the loss in potential rent (Base Rental Revenue) can be shown on which report? - ANSWER Lease Audit ______________________ is used in retail properties where tenants are expected to pay a percentage of their sales to the property owner. - ANSWER Percentage Rent What is the default calculation formula for Chargeable Sales? - ANSWER Sales Volume - Breakpoint Calculate the General Vacancy Loss using the following assumptions: -PGR: $800,000 -ATV: $20,000 -Calculation: 5% of PGR - ANSWER [(800,000 + 20,0000)*0.05] - $20,000 = $21,000 True or False: Additional principal payments can be factored into the loan computations? - ANSWER True While running a 7-year analysis on a property with a 30-year debt note in ARGUS Enterprise, the note will _____________ at the end of the projection. - ANSWER Balloon After changing the modeling policy for Gross Ups, any Recovery Structure already created will default to the Gross Up percent in the Modeling Policies window. - ANSWER False The default formula for Leasing Commissions is: - ANSWER Base Rent + Step Rent + CPI - Free Rent To indicate that an expense should not be included in the cash flow projection nor used in the calculation of the NOI, select ________________ - ANSWER Reference Only True or False: The percentage of the expense that is eligible to be recovered can be altered for the entire property within the Expense tab - ANSWER True What is the default formula for Free Rent? - ANSWER Base Rent + Fixed Steps + CPI True or False: Months Vacant Overrides will only affect the first rollover and there will be no blending based upon the renewal probability. - ANSWER True True or False: The Batch Update allows a user to model several changes simultaneously instead of performing each individual adjustment. - ANSWER True True or False: When creating a sensitivity scenario, changes to individual properties may be made at the top of the screen. - ANSWER False Different levels of detail can be set for the Audit Log in which Portfolio Application tab? - ANSWER Portfolio Details To change the report interval setting, click the _____________ button. - ANSWER Report Options Which report within Portfolio Level Reports will show individual property information that makes up the selected cash flow totals? - ANSWER Cash Flow Detail All of the following are options for exporting Portfolio Level Reporting except: a) Excel b) Tiff c) PDF d) HTML - ANSWER d) HTML Task Pane provides a number of shortcuts and convenient functions, which include: - ANSWER Getting Started, ARGUS Alerts, ARGUS Valuation - DCF Wizard, and Shared Workspace Getting Started (Task Pane) - 4 - ANSWER Create new files, open recent files, connect to ARGUS website, and access a shared workplace online ARGUS Alerts - ANSWER Login to the ARGUS website to receive instant alerts, news, and other information Property Library - ANSWER Window allows you to view a list of property files in the active directory when other ARGUS Valuation - DCF property files are open. Toolbar (on the Property Library window) - ANSWER Allows you to navigate to directories and to perform actions on one or multiple ARGUS files without opening the files themselves The Globe and Magnifying Glass icon - ANSWER Is a link to view the property in Google Maps Where are the Export, Print, Calculate, and Pause button located? - ANSWER Bottom right hand corner Where is the import Graphic icon located? - ANSWER Upper left corner of the executive dashboard The Import Graphics icon - ANSWER Import images and will be included on each new property created with that template To create or modify a dashboard select the (blank) - ANSWER Dashboard template icon Where is the Dashboard Template icon located? - ANSWER The toolbar of the executive dashboard What are the (blank) per-formatted Dashboard templates? - 6 - ANSWER Valuation Summary, Classic, Investment, Appraisal,Lending, and Navigation Miscellaneous Revenues - ANSWER Are property-level income items not paid by the tenants. Any operating revenue not paid by the tenants can be entered in this screen. What are examples of miscellaneous revenues? - ANSWER Vending machines or rental of roof antennas What are the possible misc. revenues that can be selected? (5) - ANSWER % of EGR, $ Amount, $/Area, % of Constant, % of Line % of Line - ANSWER Misc revenue; the allows the revenue to be based on a percentage of other items in the property % of EGR - ANSWER Misc. Revenue; percentage of the Effective Gross Income $ Amount - ANSWER Misc. Revenue; interpreted as a full payment amount $/Area - ANSWER Misc. Revenue; multiplied by the area measure selected in the area column % of Constant - ANSWER Misc Revenue; interpreted as a percentage of the Amount column. If the amount of revenue is set to (blank), the Area/Constant column will be unavailable - ANSWER $ Amount, % of EGR, % of line Rebursable Expenses - ANSWER Property expenses the landlord will recover. All entires will be available for reimbursement by the tenants. Common Reimburment Expenses - ANSWER CAM, Taxes, Insurance, Repairs & Maintence Reimbursable Expenses may be entered as (7) - ANSWER Simple Amount, Detailed Amount, % of EGR, $/Area, % of Constant, % of Line, % of Fixed column - ANSWER Determines the amount of the expense ( or revenue) that is based on occupancy Capital Expenditures - ANSWER Not considered part of a property's NOI and appear below the income line on the CF in the Capital Costs section Typical CapEx are: - ANSWER Stuctural or Capital reserves, building repairs, or improvements (anything to improve te property value that is not routine) Property Level reports can be accessed in (2) ways - ANSWER Property level Reports icon in the toolbar or Reports Menu - Property Level selection Property Level Reports can be viewed - ANSWER Annually, Monthly, Quarterly, Semi- Annually Ways to access the Rent Roll - ANSWER From tenant menu --> select Rent Roll, or clock the Rent Roll icon on the toolbar Default Lease Type choices are: - ANSWER Office, Retail, Industrial, Pad Site and Storage In the Rent Roll, enter the Base/Min Rent field as (3) - ANSWER Amount per area, total amount for a given period, or percent of market rent What are three ways a tenant can reimburse expenses? - ANSWER None, Net, or Base Stop Net reimbursements - ANSWER Triple net leases - tenant will pay their natural pro-rata share of all Reimbursable Expenses Base Stop - ANSWER Typically 1 year and in Office spaces What kind of reimbursement method is used for gross leases? - ANSWER Base Stop True of False: An ARGUS Valuation - DCF cannot calculate a base year prior to the analysis start date - ANSWER True Rent Abatement - ANSWER Number of months of free rent for the current lease STARTED AT THE BEGINNING OF THE LEASE TERM Leasing Costs - ANSWER Consist of Tenant Improvements and Leasing Commissions Tenant Improvement default unit is... - ANSWER $/SqFt Leasing Commissions default unit is... - ANSWER Percentage of a tenant's total rent Market Leasing Assumptions are used for what purpose? - ANSWER To control what happens to the contract lease after it expires and goes to market