Question
4) A property is expected to generate $450,000 of net operating income over the next 12 months.Discussion with lenders leads to the conclusion that the
4) A property is expected to generate $450,000 of net operating income over the next 12 months.Discussion with lenders leads to the conclusion that the minimun acceptable debt coverage ratio will be 1.20 and that loan terms will be 5 percent per annum, with 20-year amortization (monthly payments).
a. What is the maximum supportable annual debt service?
b. What size loan does this imply?
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Introduction To Finance Markets, Investments, And Financial Management
Authors: Ronald W. Melicher, Edgar A. Norton
17th Edition
1119561175, 978-1119561170
