Suppose your lender agrees to an 80% LTV, the cost to borrow $1 at 8% for 30 years equals $0.0888 per year, NOI = $20,000, annual debt service - $7,000 and your down payment was $100,000. Using the Band of Investment Approach to estimating your cap rate, the Annual Mortgage Constant (AMC) would equal approximately: 7.1% 2.6% $0.0888 9.7%