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An investor wishes to purchase a retail building that generates $42,000 in net operating income. The purchase price for the building is $500,000, and the investor can obtain a 75% loan at 8.5% amortized over 25 years in monthly payments.

a) What is the debt service?

b) What is the debt coverage ratio?

Show all your work including the formulas you used.

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Financial Management, Finance

Category:- Financial Management
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