so.4 A stabilized, Class A office building with a sale price of $50,000,000 is being offered in a suburbanarea of a Tier 1 market. Suppose you are an analyst at a life insurance company lender and amortgage banker has asked your firm to provide a credit-approved term sheet for a 70% LTVmortgage loan. You expect the following operating results during the first year of ownership:• Potential Gross Income (PGI)• Effective Gross Income (EGI)• Net Operating Income (NOI)$5,850,000$5,400,000$3,250,000We covered debt coverage ratio (DCR) in Ch. 18. However, at that time you did not yet know howto calculate a mortgage payment, and so it was given to you in exercises. Let's revisit DCR. If theinterest rate on the proposed loan is 6%, what is the DCR assuming the loan features a 25-yearamortization?Hint: Remember to annual the mortgage payment(Input your answer as a rational number rounded to the nearest hundredth, e.g., 1.35)

The Debt Coverage Ratio (DCR) is calculated by dividing the Net Operating Income (NOI) by the annual…

Answered: A stabilized, Class A office building…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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