Finance
A Nebraska commercial lender requires a debt service coverage ratio (DSCR) of 1.25. A property has an NOI of $100,000. The maximum annual debt service the lender will approve is:
A$75,000
B$80,000✓ Correct
C$100,000
D$125,000
Explanation
DSCR = NOI ÷ Annual Debt Service. 1.25 = $100,000 ÷ ADS. ADS = $100,000 ÷ 1.25 = $80,000. A DSCR of 1.25 means the property generates 1.25 times the income needed to cover debt payments.
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