What is the maximum amount of debt service the lender

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1. A lender requires a 1.20 debt coverage ratio as a minimum. If the net operating income of a property is $60,000, what is the maximum amount of debt service the lender would allow? (B)

2. Consider an investment in which a developer plans to begin construction of a building one year if, at that point, rent levels make construction feasible and the building will cost $1 million to construct. There is a 50 percent chance that NOI will be $160,000 and a 50 percent chance that NOI will be $80,000. Using the traditional approach, similar to the “highest and best use” approach, what would be the land value of the property assuming a cap rate of 10 percent (12 percent discount rate and an NOI growth rate of 2 percent)? ) $120,000 (B) $200,000 (C) $300,000 (D) $833,333 (E) $1,000,000

3. Using the same information as the question above, what would the land value be under the real options approach? (C)

Reference no: EM131510961

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