#3) As the mortgage loan officer, you are computing the mortgage terms on an office building loan. The building is expected to generate a net operating income of $250,000 in the next year. Your bank requires the following conditions for loans on this type of property: Minimum Required Debt Coverage Rate = 125%; Maximum Loan to Value Ratio = 75% Capitalization rate used in determining building value = 10%. Contract mortgage rate = 8%. Loan amortization and maturity = 20 years. Assume annual payments.

#3b) Your boss has told you that you can raise the LTV up to 80%, as long as the Debt Coverage Rate does not drop below 125%. Determine the new maximum feasible loan size and the associated mortgage payment.