Week 5 Quiz

Question 1

Which of the following is not an Unlevered Return Metric?

Answer 1

DSCR (Debt Service Coverage Ratio)

Question 2

From the perspective of the Lender, which debt metric is closest to a Cash-on-Cash return?

Answer 2

Debt Yield

Question 3

An interest only loan would have higher monthly payments? True or False

Answer 3

False

Question 4

What is the main reason why a lender would want a borrower to have amortization on their loan for a value-add deal?

Answer 4

Reducing ending balance

Question 5

If the Amortization Schedule and (Loan) Term were the same period of time (e.g. both 20 years) on your loan, the ending balance would be $0. True or False

Answer 5

True

Question 6

9. Based on the following terms, generally speaking which amount would the lender give the borrower?

LTV Test (80% based on $20M Value) = $16M Loan

DSCR (1.15x DSCR, 5% interest rate, 20 year term) = $15M Loan

Debt Yield (9.6% DY) = $14M Loan

Answer 6

Debt Yield

Question 7

What would a lender opt for in giving money to a borrower?

Answer 7

Option that would lend the least amount of money

Question 8

When calculating levered returns, which item from Day 1 Sources & Uses Table should your Year 0 be linked to?

Answer 8

Equity