Question 2

A property is expected to generate $300,000 of NOI over the next 12 months. Discussion with lenders leads to the conclusion that the minimum acceptable debt-coverage ratio will be 1.20 and that loan terms will be 8% per annum, with 20-year amortization (monthly payments).

A. What is the maximum supportable annual debt service?

Solve 3 ways:

- the PV or PMT functions on Google Sheets

- your HP 12c (tell me which keys you used)

-the Mortgage Constant

B. What size loan does this imply?

Solve 3 ways:

- the PV or PMT functions on Google Sheets

- your HP 12c (tell me which keys you used)

-the Mortgage Constant