Data Analytics For Accounting
19th Edition
ISBN: 9781260375190
Author: RICHARDSON, Vernon J., Teeter, Ryan, Terrell, Katie
Publisher: Mcgraw-hill Education,
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Chapter 1, Problem 3P
To determine
Do an Excel PivotTable according to state and check the number of rejected applications for State A. Identify relative proportion among number of rejected loans and population of State A as compared to the overall population of U.S.
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This is a Debt Coverage Ratio or DCR question for part a and a CAP rate question for part b]. Wendy is going to purchase a commercial building and is working with a commercial lender at her local bank. The bank has some loan parameters that Wendy must follow. Understanding the rules will allow her to calculate her cash, income,
and payment projections. The bank requires a 1.4 debt coverage ratio for her project. Wendy needs to calculate her net operating income or NOI first. The debt coverage ratio is based on this number. Then she will apply for a 20 year loan at 5% with annual payments. Information on the property includes:
Gross rents- $780,000
Vacancy 5%
Salaries $85,000
Other Fixed Expenses $125,000
Variable Expenses 20% of gross rents.
NOI=_________________
Use the NOI and Debt Coverage requirement to calculate the answer.
What is the largest annual payment the bank will allow?
If Wendy had to buy the property at a 6% CAP (capitalization) rate, what is the asking price?
Answer your friend who has following statements and questions:
(1) Household debt and house prices do not cause systemic risk in a developed country like Norway
(Table 1).
(2) House prices grow equally across different Norwegian cities (Table 2).
Table 1:
Table 2:
Mortgages/Total Regional House Prices
(2003=100)
Household Debt
House
Ratio (% Prices/Disposable Loans (%)
Disposable | Income
Income)
Debt
Per
Сapita (Ages 15-
74)
Oslo
Kristiansand | Stavanger
2000
130
130
140
2009
180
42
150
175
200
200
230
200
300
2012
160
43
195
250
2018
47
220
260
(3) House price growth is being totally determined by the cultural homeownership of Norwegians
rather than the Norwegian tax system.
(4) Household debt does not theoretically cause a problem in Norway since many households have
also assets to pay off the debts.
Consider the 2013 rejected loan data from LendingClub titled "DAA Chapter 1-2 Data." Similar to the analysis done in the chapter, let's
scrub the employment length. Because our analysis requires risk scores, debt-to-income data, and employment length, we need to
make sure each of them has valid data.
a.Sort the file based on employment length and remove those observations (the complete row or record) that have a missing score
("NA"). Note that we are including the employment lengths of zero, different than the analysis in the chapter text.
b. Sort the file based on debt-to-income and remove those observations (the complete row or record) that have a missing score, a
score of zero, or a negative score, similar to that done in Problem 10.
c. Sort the file based on risk score and remove those observations (the complete row or record) that have a missing score or a score
of zero, similar to that done in Problem 9.
d. There should now be 669,993 observations. Any thoughts on what biases are…
Chapter 1 Solutions
Data Analytics For Accounting
Ch. 1 - Prob. 1MCQCh. 1 - Prob. 2MCQCh. 1 - Prob. 3MCQCh. 1 - Prob. 4MCQCh. 1 - Prob. 5MCQCh. 1 - Prob. 6MCQCh. 1 - Prob. 7MCQCh. 1 - Prob. 8MCQCh. 1 - Prob. 9MCQCh. 1 - Prob. 10MCQ
Ch. 1 - Prob. 1DQCh. 1 - Give an example of how Data Analytics creates...Ch. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Prob. 5DQCh. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 12DQCh. 1 - To address the question Will I receive a loan from...Ch. 1 - Download and consider the data dictionary file...Ch. 1 - Download and consider the rejected loans dataset...Ch. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Consider the 2013 declined loan data from...Ch. 1 - Consider the 2013 declined loan data from...
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