Answer:
1.5
Step-by-step 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