Answer :
Maximum loan you would expect to negotiate if a lender is offering a 30 year self-amortizing loan structure at an annual rate of 7% is approx $1,076,200
Debt coverage ratio = Net operating income / total debt service
1.3 = $111,700 / total debt service
total debt service = $111,700 / 1.3
= 85,923.0769
Monthly payment = total debt service / 12
= 85,923.0769 /12
= 7160.25641
Periodic rate = rate / 12
= 7% /12
= 0.5833%
No of periods = years *12
= 30 * 12
= 360
Present value = Monthly payment * ( 1- ( 1/ ( 1+ rate )^time ) / rate
=7160.25641 * ( 1- ( 1/ ( 1+ 0.5833% )^360 ) / 0.5833%
= 7160.25641 * ( 1- ( 1/ ( 1.005833 )^360 ) / 0.005833
= 7160.25641 * ( 1- ( 1/ 8.116497 ) / 0.005833
= 7160.25641 * ( 1- 0.1232 ) / 0.005833
= 7160.25641 * ( 0.876794 ) / 0.005833
= $1,076,240.7269
In finance, a loan is the lending of money by way of one or greater individuals, organizations, or different entities to different people, companies, and so on. The recipient incurs a debt and is typically at risk of pay interest on that debt till it is repaid as well as to repay the primary amount borrowed.
A loan is a amount of cash that an man or woman or business enterprise borrows from a lender. it can be classified into three fundamental categories, specifically, unsecured and secured, conventional, and open-give up and closed-stop loans.
A loan is a shape of debt incurred by an individual or different entity. The lender—generally a employer, financial institution, or government—advances a amount of cash to the borrower. In return, the borrower has the same opinion to a certain set of terms along with any finance costs, hobby, reimbursement date, and different conditions.
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