Ann wants to buy a building. The annual NOI for the building will be $125,000. She wants to get a 20 year interest only fixed rate mortgage at an annual rate of 8.35% with annual compounding and annual payments to buy the building. The lender has a minimum Debt Service Coverage Ratio (DSCR) of 1.55.

What is the largest annual loan payment the lender will allow Ann to make based on the DSCR?

(A) $80,645.16

(B) $193,750.00

(C) $965,810.31

(D) $1,497,005.99

ANSWER: A