You are considering the purchase of a retail property for $500,000 (including purchase costs) as...
50.1K
Verified Solution
Link Copied!
Question
Finance
You are considering the purchase of a retail property for $500,000 (including purchase costs) as a 3-year investment. The annual gross income in Year 1 is $50,500 and operating expenses in the same year amounts to $8,000. "Gear it UP" Bank has offered your firm finance at 5.5% nominal per annum interest only for three years. Interest is compounded monthly, but payments are made annually at the end of each year, up to either an 80% Loan-to-Value ratio or a 15 Debt Coverage Ratio (based on before-tax income in year 1), whichever is the smaller loan. Determine how much you can borrow from "Gear it UP" Bank by using your calculations of the Loan-to-value ratio loan and the Debt Coverage Ratio Loan. (Must include workings and express as whole number)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
