Problem:
Assume a retail shopping center can be purchased for $6 million. The center's first year NOI is expected to be $519,000. A $4,300,000 loan has been requested. The loan carries an 8 percent fixed contract rate, amortized monthly over 25 years with a 10-year term.
Required:
Question: What will be the property's (annual) debt coverage ratio in the first year of operations?
Note: Please show how you came up with the solution.