A builder gets a construction loan of 10 million. For simplicity, assume the loan has an interest

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A builder gets a construction loan of 10 million. For simplicity, assume the loan has an interest rate at j1=6%. The loan does not require payment during the construction process. Construction will take 3 years to complete.

The builder will use a permanent loan to pay back the construction loan at the end of 3^rd year.

What is the dollar size of the permanent loan?

Once construction done, the building will be leased. Suppose it earns an actual NOI of 1.2 million per year.

Calculate the Debt Coverage Ratio. Assume the permanent loan has an amortization of 20 years, j2=4.5% and monthly payment.

Related Book For answer-question

Cornerstones of Financial and Managerial Accounting

ISBN: 978-0324787351

1st Edition

Authors: Rich Jones, Mowen, Hansen, Heitger

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Posted Date: Apr 26, 2023 06:47 AM

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A builder gets a construction loan of 10 million. For simplicity, assume the loan has an interest

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Cornerstones of Financial and Managerial Accounting

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