Finance
A Wyoming commercial property investor computes the 'debt coverage ratio' (DCR). A DCR of 1.25 means:
AThe investor owes 125% of the property's value
BThe NOI is 1.25 times the annual debt service—the property generates 25% more income than needed to cover loan payments✓ Correct
CThe property is 25% over-leveraged
DThe cap rate is 1.25%
Explanation
DCR = NOI ÷ Annual Debt Service. A DCR of 1.
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