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25 April, 17:36

Given the following information, calculate the debt coverage ratio of this commercial loan. Estimated net operating income (NOI) in the first year: $150,000, Debt service in the first year: $100,000, Loan amount: $1,000,000, Purchase price: $1,300,000

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  1. 25 April, 18:04
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    1.5

    Explanation:

    Given the following information, calculate the debt coverage ratio of this commercial loan. Estimated net operating income (NOI) in the first year: $150,000, Debt service in the first year: $100,000, Loan amount: $1,000,000, Purchase price: $1,300,000

    The debt service coverage ratio (DSCR) is defined as net operating income divided by total debt service. For example, suppose Net Operating Income (NOI) is $120,000 per year and total debt service is $100,000 per year. the DCR is 1.2

    So back to our question:

    the debt coverage ratio of this commercial loan.

    =Estimated net operating income (NOI) in the first year divided by the Debt service in the first year: $100,000

    150000/100000

    1.5
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