Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7
Potential Gross Rent	$322,875	$330,947	$339,221	$347,701	$356,394	$365,303	$374,436
Less: Vacancies @ 5%	16,144	16,547	16,961	17,385	17,820	18,265	18,722
Effective Gross Rent	$306,731	$314,400	$322,260	$330,316	$338,574	$347,038	$355,714
Add: Other Income	10,250	10,506	10,769	11,038	11,314	11,597	11,887
Effective Gross Income	$316,981	$314,400	$322,260	$330,316	$338,574	$347,038	$355,714
Less: Operating Expenses
Property Taxes	$71,400	$71,400	$76,048	$76,048	$76,048	$76,048	85,039
Other Operating Expenses	60,261	61,767	63,311	64,894	66,517	68,180	69,884
Total Expenses	$131,661	$133,167	$139,359	$140,942	$142,565	$144,228	$154,923
Net Operating Income	$185,320	$191,739	$193,670	$200,412	$207,323	$214,407	$212,678

Assignment:

1. Based on the NOI projection for the first year in the excel spreadsheet above, estimate the mortgage loan that will be available if the lender requires a debt-coverage ratio of not less than 1.20. The anticipated loan terms are interest at 8.5% per annum, and level monthly payments to amortize the loan over 20 years. No discount points or loan origination fee is anticipated.
2. Explain your findings and their significance.