CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

An analyst has gathered this data about a commercial property:

Gross Potential Rents: $1,000,000
Total Operating Expenses: $200,000
Net Operating Income: $800,000
Commercial Loan Size: $8,000,000
Interest Rate: 5%
Annual Payments (Interest + Principal Repayments): $600,000

The DSC ratio of the loan is ______.
A. 1.33
B. 1.67
C. 2.0
Explanation: DSC = Net Operating Income / Annual Debt Service = 800,000/600,000 = 1.33

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