An investor is considering buying an income-producing property. She expects the first year's figures to be as shown below. The investor is applying for a loan which requires annual debt service that would result in before-tax cash flow of $20,000. $120,000 Potential gross income Vacancy and collection losses 10,000 Effective gross income 110,000 Operating expenses 40,000 Net operating income 70,000 Before-tax cash flow 20,000 If the lender requires a minimum debt coverage ratio of 1.5, would the loan be approved? Yes, because the debt coverage ratio is 3.5. No, because the breakeven ratio is 0.82. Yes, because the before-tax cash flow is positive. No, because the debt coverage ratio is 1.4. An investor is considering buying an income-producing property. She expects the first year's figures to be as shown below. The investor is applying for a loan which requires annual debt service that would result in before-tax cash flow of $20,000. $120,000 Potential gross income Vacancy and collection losses 10,000 Effective gross income 110,000 Operating expenses 40,000 Net operating income 70,000 Before-tax cash flow 20,000 If the lender requires a minimum debt coverage ratio of 1.5, would the loan be approved? Yes, because the debt coverage ratio is 3.5. No, because the breakeven ratio is 0.82. Yes, because the before-tax cash flow is positive. No, because the debt coverage ratio is 1.4