You are exploring an opportunity to build an office building…

You are exploring an opportunity to build an office building in New Orleans, Louisiana. After performing the feasibility study you identify the following pertinent information. The office building is 90,000 square feet in size. The building has an estimated total development cost of $20,250,000. Your market study projects annual NOI of $1,247,000. Based on your discussions with the lender you would be able to obtain a loan at 60% loan to cost with a 4.25% interest rate and a 30 year amortization.  What is your projected debt yield on this project?