Real Estate Principles 3rd Edition by David Ling,Wayne Archer

Exercise 5

Assume a retail shopping center can be purchased for $5.5 million. The center's first year NOI is expected to be $489,500. A $4,000,000 loan has been requested. The loan carries a 9.25 percent fixed contract rate, amortized monthly over 25 years with a 7-year term. What will be the property's (annual) debt coverage ratio in the first year of operations
A) 1.40.
B) 1.19.
C) 0.84.
D) 0.08.