You are a loan officer at an NYC Investment Bank. You have been asked to review and make a recommendation on accepting or rejecting a loan application.

Lending Assumptions:

10 Year T-Bill Rate: .764

Bank Loan Mark-up: 300 Bps

Term-Years 10

Amortization: Years 30

Loan Type: Balloon

DSCR: 1.2

LTV: 70%

Property Acquisition Details:

Asking Price: Cap Rate: 5.05%

Cash Flow: $72,000

Please answer the following 3 Questions:

-How much would the bank loan his company?

-What would the annual payment be?

-Should the bank approve this loan application?