Finance
A Texas borrower's lender requires a debt-service coverage ratio (DSCR) of at least 1.25 for a commercial loan. If the property's NOI is $125,000, what is the maximum annual debt service allowed?
A$100,000✓ Correct
B$105,000
C$110,000
D$120,000
Explanation
DSCR = NOI ÷ Annual Debt Service. For DSCR of 1.25: 1.25 = $125,000 ÷ Annual Debt Service. Annual Debt Service = $125,000 ÷ 1.25 = $100,000.
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