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"A lender has reviewed the financial statements for an apartment property, and the lender requires a debt coverage ratio of 1.4. If the mortgage payment will be $100,000 annually, the lender will require that the property generate"

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hyderali230

Answer:

The lender will require that the property to generate $140,000 to maintain the required debt coverage ratio.

Explanation:

Use the formula of Debt coverage ratio to calculate the return that property should generate for required Debt coverage ratio.

Debt Coverage Ratio = Net Income / Loan amount

1.4 = Net Income / $100,000

Net income = $100,000 x 1.4

Net income = $140,000

The lender will require that the property to generate $140,000 to maintain the required debt coverage ratio.

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