Calculate the indicated debt coverage ratio

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The following property information is provided. Net operating income (NOI) $95,000 Debt service (DS) $62,500 Mortgage Amount $620,000 Loan-to-value ratio (M) 0.80

a. Calculate the indicated debt coverage ratio.

b. Calculate the mortgage constant, or mortgage capitalization rate (Rm).

c. Using the debt coverage ratio and the other information provided, calculate the overall rate (RO) for this property.

d. The property you are attempting to appraise using the income approach has a NOI of $125,000. Can you use the above information (a through c) to estimate the value of this property? If so, what is it? e. What role does the loan-to-value ratio play in this valuation approach?

PLEASE SHOW YOUR WORK.

Reference no: EM131342133

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