Question
In: Finance
A lender requires a 1.3 debt coverage ratio as a minimum. If thenet operating income...
A lender requires a 1.3 debt coverage ratio as a minimum. If the net operating income of a property is $88,400 what monthly amount of debt service would be acceptable?
| a. | $114,900 or higher | |
| b. | $5,667 or lower | |
| c. | $101,500 or lower | |
| d. | $114,900 or higher |
Solutions
Expert Solution
Debt Coverage Ratio = Net Operating Income/Total Annual Debt Service
1.3 = $88,400/Total Annual Debt Service
Total Annual Debt Service = $68,000
So, Monthly Debt Service = Total Annual Debt Service/12
Monthly Debt Service = $68,000/12
Monthly Debt Service = $5,666.67
So, monthly amount of debt service would be acceptable is $5666.67 or lower
Option B
jeff jeffy answered 2 years agoRelated Solutions
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