Question
Compare ratio calculations to the standards outlined and comment on this loan's viability. Loan-to-value ratio= ($1,000,000/$1,400,000) *100%= 71.43% Debt Service Coverage Ratio= Net Operating Income/
Compare ratio calculations to the standards outlined and comment on this loan's viability.
Loan-to-value ratio= ($1,000,000/$1,400,000) *100%= 71.43%
Debt Service Coverage Ratio= Net Operating Income/ Annual Debt Service= $125,000/$95,000= 1.32
Operating Expense Ratio= Total Operating Expenses/ Gross Income= $90,000/$200,000= 45%
Debt Yield Ratio = NOI/Loan Amount x 100% = $125,000/$1,000,000 x 100% = 12.5%.
Debt Ratio = Monthly Debt/Gross Income = $4,200/$12,000 = 35%
Step by Step Solution
3.44 Rating (151 Votes )
There are 3 Steps involved in it
Step: 1
Lets evaluate each ratio 1 LoantoValue Ratio LTV The ratio is 7143 which means the loan amount is 71...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Using Financial Accounting Information The Alternative to Debits and Credits
Authors: Gary A. Porter, Curtis L. Norton
7th Edition
978-0-538-4527, 0-538-45274-9, 978-1133161646
