Your property has net operating income of 4,500,000. Assuming you value the property with a cap rate of 6.5%, what is the DSC ratio if the lender will lend up to 75% of value and the rate is 4.5% based on a monthly pay, 30 years, fully amortizing loan? Group of answer choices 1.43 1.35 1.51 1.27

Your property has net operating income of 4,500,000. Assuming you value the property with a cap rate of 6.5%, what is the DSC ratio if the lender will lend up to 75% of value and the rate is 4.5% based on a monthly pay, 30 years, fully amortizing loan? Group of answer choices 1.43 1.35 1.51 1.27

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 13P

See similar textbooks

Related questions

Q: Lindsay is 25 years old and has a new job in web development. She wants to make sure that she is…

A: Future value is the accumulated sum of money that is invested with the motive to earn a certain…

Q: When variable costs per unit increases, the gross margin will ceteris paribus. increase O decrease…

A: After deducting all costs directly related to producing the goods or services for sale, a company's…

Q: Macaulay duration is the optimal holding period to immunize the interest rate risks, namely to make…

A: Solution: Macaulay duration is the time period at which the re-investment risk and the price risk…

Q: IBM stock currently sells for 64 dollars per share. The implied volatility equals 40.0. The…

A: A contract that allows the buyer to acquire or transfer an underlying possession in the upcoming…

Q: The stock of Alpha Tool sells for $70.20 per share. Its current dividend rate, D0, is $2 per share.…

A: Concept. According to Gordon's growth model , P =[ D (1+g) ] ÷ ( ke - g) Where , P = current market…

Q: A credit card company determines a card holder's minimum monthly payment by adding all new interest…

A: (a) Minimum monthly payment is calculated by taking 1.5% of outstanding principal.…

Q: An investment has been found to have two different IRRs, one at 14% and the other at 20%. When a…

A: A project has two IRRs. We need to find the zone of rate of return when NPV will be positive and the…

Q: Firm Portfolio Weight Volatility Correlation w/ Market Portfolio Taggart Transcontinental…

A: The volatility of market portfolio is 10% The expected return on market is 12% Risk-free rate is 4%…

Q: 25. Real Options. Price support systems for various agricultural products have allowed farmers to…

A: Ans) An option is a derivative instrument in which holder gets the right but not the obligation to…

Q: What is the expected return of the stock investment? % (Round to two decimal places.)

A: An economy goes through different cycles and periods of boom, recession etc. The return from a…

Q: A couple has a $129,000, 20-year mortgage at 7.2% compounded monthly. (a) Find the monthly payment.…

A: Monthly payment amount is calculated using following equation Periodic payment = i*A1-11+in Where, i…

Q: Consider the commodities and financial assets listed in the following table: Spot Price $2,960 per…

A: According to bartelby guidelines, if question involves multiple subparts, then 1st sub 3 parts needs…

Q: ________ are assessments of political and economic events produced by specialized organizations of…

A: Companies that operate in multiple countries have to perform according to the laws, policies, and…

Q: a company has a beta value of 1.3, the risk-free rate of return is 8% and the historical risk…

A: Beta of the Company is 1.3 Risk-free rate is 8% The risk premium is 5% To Find: Expected return

Q: Hours Worked Hourly pay rate Gross pay (must show your work) 40 $15

A: The total number of Hours worked is 40 hours The hourly pay rate is $15 To Find: Gross pay

Q: Suppose that all stocks can be grouped into two mutually exclusive portfolios (with each stock…

Q: What is Eurodollar futures? Why and when will a company use Eurodollar futures?

A: We need to explain Eurodollar futures and why and when they are used.

Q: Michael Sanchez purchased a condominium for $73,000. He made a 20% down payment and financed the…

A: Monthly payment on the loan includes the payment towards principal and interest. From the table…

Q: 1. Suppose the interest rate decreases to 9% as an annual percentage rate. and durations of the two…

A: A bond's duration measures the price sensitivity of the bond due to interest rate change (YTM)..…

Q: Joan has savings of $12,000 on June 1. Since she may need some of the money during the next three…

A: We have two investment options. We need to find how much more is possible in one option over the…

Q: 51. Comparing Cash Flow Streams. You have your choice of two investment accounts. Investment A is a…

A: Future value of the annuity is the amount that was being deposited over the period of time and…

Q: hat is the present value of a cash flow stream of 1,000 per year annually for 12 years that then…

A: Present value is the equivalent value of money today based on the based on the future cash flow from…

Q: 4. On April 1, 2021, David gathered the following information of a bond from Bond Price Bulletin. If…

A: Bonds are traded in the market and there are sellers and buyers in the market and depending on that…

Q: You are considering starting a new factory producing small electric heaters. Each unit will sell at…

A: Financial Break even quantity is the number of units which should be produced such that the NPV of…

Q: Pitt Company is considering two alternative investments. The company requires a 12% return from its…

A: IRR is the internal rate of return and is one of the most used capital and is based on the time…

Q: A wealthy graduate of a local university wants to establish a scholarship to cover the full cost of…

Q: Argyl Manufacturing is evaluating the possibility of expanding its operations. This expansion will…

A: CONCEPT. whenever project is undertaken , there are various cash inflows and cash outflows…

Q: ou borrow 300,000 to buy a new house. The loan is a conventional 30-year loans and…

A: Borrowed amount is $300,000 Time period is 30 years Monthly payment is of $2,948.01 To Find:…

Q: Jamie needs a new roof on her house. The cash cost is $5600. She decides to finance the project by…

A: If an individual takes a loan from the bank, It is the individual's responsibility to pay the…

Q: An Asian option is a European type of derivative, it cannot be priced using a binomial tree because…

A: Asian option tends to decrease volatility on the basis of options whose payoffs are a single price…

Q: City Council Limited has 5 million shares outstanding, selling at $25 per share and there is no…

A: We have a case recapitalization, where the equity is partially replaced by debt. We will be using…

Q: Scarlet Company received an invoice for $66,000.00 that had payment terms of 3/5 n/30. If it made a…

A: Invoice The list that shows the items purchased by the buyer along with the amount due is known as…

Q: Assume that both portfolios A and B are well diversified, that E(rA) = 22%, and E(rB) = 17%. If the…

A: Expected return of A , ErA is 22% Expected return of A , ErB is 17% Beta of A is 1.5 Beta of B is…

Q: Assume you are lending money to company X. A credit default swap (CDS) consists of an agreement by a…

A: Credit default swaps (CDS) are derivative instruments that are purchased by investors to transfer…

Q: You are looking to invest in a chicken farm which produces $5000 worth of eggs in its first year. As…

Q: Stubborn Motors, Inc., is asking a price of $87 million to be purchased by Rubber Tire Motor Corp.…

A: Net present value is a capital budgeting technique used to analyze investment profitability87. It is…

Q: A developer is pursuing a project with the following: Capital cost of project: $100,000.00 Initial…

A: According to bartelby guidelines , if question involves multiple subparts , then 1st sub 3 parts…

Q: (Cost of debt) Temple-Midland, Inc. is issuing a $1,000 par value bond that pays 7.9 percent annual…

A: Par Value is $1,000 The annual coupon rate is 7.9% Time to maturity is 15 years Price of bond is…

Q: Apolonia Place is an office building that has recently been put up for sale. It is rented by one…

A: Capital budgeting The method of helping investors to make long-term decisions in investments…

Q: In September, there were 1,035 checking- account customers at a neighborhood bank. The forecast for…

A: Using the exponential window function, exponential smoothing is a general method for blending time…

Q: The market value of a home in Boston, MA. is $330,000. The assessment rate is 30%. What is the…

A: The market Value of Boston is $330,000 The assessment rate is 30% To Find: Assessed Value

Q: zechwan Gardens, Inc. has been thinking about further expansion of thebusiness. They have $40,000…

A: concept. In present worth method , present value of all the cash flows associated with investment…

Q: Given: $35,000 - Cost 1.0% monthly interest ratw $7000 - downpayment 4 year loan for…

A: Solution:- When an amount is borrowed, it can either be repaid as a lump sum payment or in…

Q: Stephen received a 30 year loan of $225,000 to purchase a house. The interest rate on the loan 4.10%…

A: Mortgage loans are paid by the monthly equal and fixed payments and these payments carry the payment…

Q: A person wants to establish an annuity for retirement purposes. He wants to make quarterly deposits…

A: Solution:- An equal amount withdrawn is made each period at end of period, is known as ordinary…

Q: QUESTION 2 You are considering starting a new factory producing small electric heaters. Each unit…

A: Net present value . It is calculated by deducting initial cost from present value of cash inflows.

Q: Assume that a 15 year $1,000 bond pays annual coupon interest amounts of $117 per year is currently…

A: Yield to maturity, When the holder holds the bond until maturity, the total return earned on the…

Q: Calculate the Accrued interest in dollars and the total purchase price in dollars of the Bond…

A: Accrued interest The interest amount that is due on bond or any other debt is known as accrued…

Q: You have an account with a $1500 credit limit that charges 13.25% interest using the average daily…

A: Account - $1500

Q: Which of the following is FALSE about debt? A) Private debts include bank loans and private…

A: Several statements have been given about debt. We have to find the one that is FALSE.

Concept explainers

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.

Question

Group of answer choices

1.43

1.35

1.51

1.27

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Introduction,

VIEW

Calculation of DSC ratio is as follow

VIEW

Answer

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Q.Considering the following information, what is the net benefit if the borrower refinances the loan (benefit analysis)? Initial Loan balance: 600,000 Initial loan term: 30 years Current Loan interest: 5.25% Remaining term on current loan: 15 years New loan term: 15 years New loan interest: 2.75% Cost of refinancing: 5% of the loan amount Expected holding period: 7 years Using Excel
Considering the following information, what is the net benefit if the borrower refinances the loan (benefit analysis, NOT NPV analysis)? Initial Loan balance: 723,000 Initial loan term: 30 years Current Loan interest: 5.75% Remaining term on current loan: 20 years New loan term: 15 years New loan interest: 2.50% Cost of refinancing: 3% of the loan amount Expected holding period: 8 years In Excel
DCR: a. Calculate the DCR for an income producing property to be acquired at a price of $7M and a CAP of 5.5%. The down payment on the property is 30% of the property value and the mortgage on the remaining balance is a fixed-rate interest only loan at a rate of 4%. b. What is the meaning of a DCR of 1.40, for example? Please explain. c. List and briefly explain three different factors that are likely to cause the lender to require a higher DCR from investors?
consider the following information, what is the NPV if the borrower refinances the loan? expected holding period: 5 years, currently laon balance: 100,000, current loan interest 9%, remaining term on currentl loan: 15, new loan interest 7.5%, new loan term 30 years, cost of refinancing 4,250
Your client asks you to indicate a cap rate for the subject property using the DCR technique, using the following parameters: ● 60% loan-to-value ratio 6.50% interest rate (monthly compounding) • 30-year amortization ● 1.45x DCR What is your cap rate indicated by this technique? Your answer:
Considering the following information, what is the NPV if the borrower refinances the loan? Expected holding period: 3 years; current loan balance: $400,000; current loan interest: 5.875%; remaining term on current mortgage: 15 years; new loan interest: 3.625%; new loan term: 15 years; cost of refinancing: $6,000. Assume that the opportunity cost is 10%. Should the borrower refinance
A property has NOI of 1,000,000 and would trade at a cap rate of 5%. You can borrow at a 60% LTV, 5% interest rate and 25-year amortization schedule. What is the value of the property? What is your debt service coverage?
Suppose a homeowner has an existing mortgage loan with these terms: Remaining balance of $150,000, interest rate of 8 percent, and remaining term of 10 years (monthly payments). This loan can be replaced by a loan at an interest rate of 6 percent, at a cost of 8 percent of the outstanding loan amount. Required: a. What is the net benefit of refinancing? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places. b. What is the NPV if the homeowner expects to be in the home for only five more years? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places. a. Net benefit of refinancing b. NPV $ + 6,552.77 1,819.91
You have taken out a $7,500,000 loan with a 4% interest rate, 30 year amortization and ten year term. What is the loan balance after the final loan payment? a. $0 b. $7,390,303 c. Cannot determine with information provided d. $5,908,797
P Use to determine the regular payment amount, rounded to the nearest dollar. Consider the following pair of mortgage loan options for a nt $150,000 mortgage. Which mortgage loan has the larger total cost (closing costs + the amount paid for points + total cost of interest)? By how much? Mortgage A: 30-year fixed at 9.25% with closing costs of $2900 and 1 point. Mortgage B: 30-year fixed at 8.25% with closing costs of $2900 and 5 points. Choose the correct answer below, and fill in the answer box to complete your choice. (Do not round until the final answer. Then round to the nearest dollar as needed.) O A. Mortgage A has a larger total cost than mortgage B by $ O B. Mortgage B has a larger total cost than mortgage A by $ Help Me Solve This View an Example Get More Help - Clear All Check Answer MacBook Air >> 吕口 F3 esc F10 F1 F12 F1 F2 F5 F6 F7 F8 2# $ A & 2 3 4 6 7 8
Problem 6. Including loan The following investment alternatives are being evaluated. Assuming that there is only $30,000 available and the surplus will be acquired through a loan at 5.5% annual effective interest payable in annual payments over 4 years. Determine which alternative should be selected. Perform the analysis using the Present Value, Equivalent Annuity and IRR Methods. Use a MARR = 7% Year A B 0 -25000 -46000 1 7460 16640 2 7460 16640 3 7460 16640 4 6500 12600 5 6000 10600
If you borrow $100,000 at an annual interest rate of 10% for six years, what is the annual payment (prior to maturity) on a fully amortized loan? 14 Your choice: 14/15 Qs A: $0.00 B: $10,000.00 C: $16,666.67 D: $22960.74