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You are considering purchasing an office building for 2 500 000

You are considering purchasing an office building for $2,500,000.

a. What is the implied first-year overall capitalization rate?

b. What is the expected debt coverage ratio in year 1 of operations?

c. If the lender requires DCR to be 1.25 or greater, what is the maximum loan amount?

d. What is the break-even ratio?

a. What is the implied first-year overall capitalization rate?

b. What is the expected debt coverage ratio in year 1 of operations?

c. If the lender requires DCR to be 1.25 or greater, what is the maximum loan amount?

d. What is the break-even ratio?

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