Debt service would provide the required debt coverage ratio

Assignment Help Financial Management
Reference no: EM131328173

1. A lender requires a 1.20 debt coverage ratio as a minimum. If the net operating income of a property is $45,000, what annual amount of debt service would provide the required debt coverage ratio?

$37,500 or higher

$37,500 or lower.

$54,000 or higher.

$54,000 or lower.

2. A graduated payment mortgage (GPM) would be most appropriate in all of the following circumstances except:

A young homebuyer whose income is expected to grow in real terms.

An inflationary environment where rents are likely to grow in nominal terms.

A declining neighborhood where property values are likely to decline.

A distressed property purchased by an investor who plans turn-around improvements.

Reference no: EM131328173

Questions Cloud

How pricing in the equity market can influence firm : Explain how pricing in the equity market can influence a firm's (capital expenditures, such as plant and equipment, or expansion)) investment decisions. Explain how financial markets might influence FACEBOOK's dividend policy.
Advantages of direct ownership of property and liquidity : All of the following are advantages of direct ownership of property as a way of investing in real estate except: "Liquidity" refers to:
Four-quadrant model : Long-run equilibrium in a DiPasquale-Wheaton “Four-Quadrant Model” (4QM) is found by:
What is one of the basic characteristics of real estate : What is one of the basic characteristics of real estate? In making single-asset real estate investment decisions, the first pass often involves calculating a series of returns, ratios, and multipliers. Which of the following is often cited as a limit..
Debt service would provide the required debt coverage ratio : A lender requires a 1.20 debt coverage ratio as a minimum. If the net operating income of a property is $45,000, what annual amount of debt service would provide the required debt coverage ratio? A graduated payment mortgage (GPM) would be most appro..
The balance of payments records : The balance of payments records. Which of the following is FALSE regarding DCR?
Most likely to occur if the investor required rate of return : A restaurant is for sale for $200,000. It is estimated that the restaurant will earn $20,000 a year for the next 15 years. At the end of 15 years, it is estimated that the restaurant will sell for $350,000. Which of the following would be MOST LIKELY..
What is the effective yield and yield to maturity : Suppose the market yield on mortgages is 9.2% in bond equivalent terms (BEY, or "coupon equivalent", CEY). What is the effective yield (EAY or EAR)? Consider a 20-year (monthly-payment), 8%, $80,000 mortgage with 2 points prepaid interest up front. W..
Are portfolio managers willing to pay premium for securities : Are portfolio managers willing to pay a premium for securities that reduce the systematic (market) risk of their portfolios? If so, why pay a premium? What makes a beta coefficient important when constructing a portfolio? If portfolio risk equals mar..

Reviews

Write a Review

Financial Management Questions & Answers

  Compute the net present value

The BCR corporation is considering buying a new machine at a cost of $400,000. They expect to have an annual cost savings of $120,000 at the end of each year for five years. They expect to incur maintenance insurance costs of $15,000 at the time of p..

  Dividend payout ratio-what is the sustainable growth rate

Last year a firm had an ROE of 6% and a dividend payout ratio of 80%. What is the sustainable growth rate?

  What is degree of operating leverage at given level output

Consider a four-year project with the following information: initial fixed asset investment = $460,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $28; variable costs = $18; fixed costs = $150,000; quantit..

  Debt outstanding-what is before-tax cost of debt for olympic

Olympic Sports has two issues of debt outstanding. One is a 9% coupon bond with a face value of $20 million, a maturity of 10 years, and a yield to maturity of 10%. The coupons are paid annually. What is the before-tax cost of debt for Olympic? What ..

  What would be the present value of a yearly annuity

What would be the present value of a yearly annuity of $105 per year for 10 years if the appropriate rate of interest is 4.5% per year and the first payment starts one year from today?

  How much do you need in your pension plans to cover need

When you retire you will initially require an annual income of 125,000 per year. You anticipate living for 25 years during retirement with an 8% investment return. How much do you need in your pension plans to cover this need? How much will you have ..

  Find the adjusted balance due at maturity

Find the adjusted balance due at maturity for a 90 day note of $12,000 at 13.7% ordinary interest if a partial payment of $6,000 is made on the 60th day of the loan. The adjusted balance due an maturity is?

  Assume that an individual engages in behaviors

Assume that an individual engages in behaviors that are in conflict with their stated religious beliefs, and they experience dissonance. What impact might this have on their beliefs? What might allow people to productively resolve that dissonance?

  The expected returns on all the securities

Assume N securities. The expected returns on all the securities are equal to 0.01 and the variances of their returns are all equal to 0.01. The covariance’s of the returns between two securities are all equal to 0.005. What value will the variance ap..

  What are the total costs–order costs plus carrying costs

Economic Order Quantity. Micro-Encapsulator Corp. (MEC) expects to sell 7,200 miniature home encapsulators this year. The cost of placing an order from its supplier is $250. Each unit costs $50 and carrying costs are 20% of the purchase price. (Pleas..

  What is the firms total corporate value

Mooradian Corporation’s free cash flow during the just-ended year (t = 0) was $150 million, and its FCF is expected to grow at a constant rate of 5.0% in the future. If the weighted average cost of capital is 12.5%, what is the firm’s total corporate..

  Proposed policy to the current income tax system

Compare proposed policy to the current income tax system using the revenue policy evaluation criteria-horizontal and vertical equity, economic effects, collectability, and adequacy.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd