Debt Coverage Ratio [0531]

Annual debt service for a mortgage loan on a certain office building is $10,000. The property generates $25,000 in annual gross rent and requires $7,000 for expenses of operation, leaving $18,000 net operating income. The debt coverage ratio is:

DCR = NOI ÷ Annual Debt Service

DCR = $18,000 ÷ $10,000 = 1.8