You are seeking financing for a $500,000 investment in an apartment building. The NOI in the first year is projected to be $35,000. The bank is willing to underwrite a fully-amortizing, 30 year fixed rate mortgage with constant monthly payments at an interest rate of 6%, compounded monthly.

Please note the following ratio:

Debt Coverage Ratio= Net Operating Income/ Annual Debt Service

Compute the Debt Coverage Ratio if the bank underwrites a mortgage at a Loan-to-Value Ratio of 75%.