How does the size of the loan the office building receives

Reference no: EM133332148

Question: Ten years ago, an office building received a 4 percent interest-only loan with a debt cover ratio of 1.5. Since that time, the income on the property has risen by ten percent. It now needs to refinance its mortgage with a 6 percent rate and a 40-year amortization. Keeping the 1.5 DCR, how does the size of the loan the office building receives change? What is one implication of this?

Reference no: EM133332148

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