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P 7 . You need financing for a $ 5 0 0 , 0 0 0 investment in an apartment building. The NOI in the
P You need financing for a $ investment in an apartment building. The NOI in the first year is projected to be $ You found a bank willing to underwrite a fullyamortizing, year, fixed rate mortgage with constant monthly payments at an interest rate of percent, compounded monthly.
a What is the debt service coverage ratio if the bank underwrites a mortgage at a loantovalue ratio of percent?
b The bank agrees to finance this investment if the loantovalue ratio of the mortgage is less than or equal to percent and the debt service ratio is greater than or equal to What is the largest loan you can get?
Assume that all other contract terms eg APR, full amortization, monthly
compounding remain the same.
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