1. Consider an 8.5% loan amortizing at a 25-year rate with monthly payments. What is the maximum amount that can be loaned on a property whose net operating income (NOI) is $500,000 per year, if the underwriting criteria specify a debt service coverage ratio (DSCR) no less than 125%?

2. Consider a building with a very long economic life. Assume at the end of year 6, NOI will be $80,000 and is expected to grow at a rate of 2 percent per year. Your companys required rate of return is 12 percent. As part of your analysis, you must calculate the reversion value (REV) at the end of year 5. What is your estimate of the reversion value (rounded to the nearest $100)?