Real Estate Investing, Loan Sizing Workout. On the Workout tab, a bank is considering lending to fund a building acquisition. The loan must satisfy both a max loan to value and a minimum debt service coverage ratio. What is the most the bank will lend? The first thing we're gonna do is calculate the loan to value. We're going to take our maximum LTV and apply it to the appraised value of the building since this is what the bank will base its loan to value on. That gives us 6.5 million. Now to look at the debt service coverage ratio it's a little more complicated. We need to take the annual cash flow available for debt service and we need to figure out how much we can borrow based off of that. And that's going to be governed by the debt service coverage ratio. So what we are effectively going to do is build a present value calculation based on this payment of the available annual cash flow available for debt service. So we will do that by taking a minus PV and we're using a minus PV because a present value calculation will return a negative value to show that it is a cash outflow or loan being made. So we'll just reverse that. So we get a positive number. We'll take the rate, which is the 4.3% divided by 12 to make it a monthly rate. Number of periods will be the amortization in years times 12 to get months. For the payment, we're going to take the annual cash flow available for debt service. We're going to divide it by 12 to get monthly and then we're gonna divide it by the governor here which is the 1.5x. So what we're saying is that we really need 1.5 times more cash flow. Cash flow available for debt service. So we're dividing by 1.5 to effectively reduce that amount. Zero will be the future value. The type of discounting will be the end of period or zero and that will give us an implied loan based on the debt service coverage ratio of 5937449.6. So basically what this is saying is based on these two factors, the most that this bank would lend would be the 5937449.6.