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      Question

      Which of the following increases the debt service

      coverage ratio (DSCR)?
      A Increase in interest expense Correct Answer Incorrect Answer
      B Increase in principal repayment Correct Answer Incorrect Answer
      C Increase in net operating income Correct Answer Incorrect Answer
      D Decrease in operating income Correct Answer Incorrect Answer
      E Increase in short-term borrowings Correct Answer Incorrect Answer

      Solution

      DSCR = Net operating income / Debt service (interest + principal). Higher operating income increases DSCR.

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