Real Estate
Annual debt service
Twelve monthly payments on a level amortising loan.
The Formula
ADS = 12 x L x i / (1 - (1 + i)^-N)
Twelve monthly payments on a level amortising loan.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| ADS | Annual debt service | currency per year | Total principal and interest paid in a year. |
| L | Loan amount | currency | The principal advanced. |
| i | Period rate | fraction per month | The annual rate divided by twelve. |
| N | Term | months | The number of monthly payments. |
What Each Symbol Means
ADScurrency per year
Annual debt service
Total principal and interest paid in a year.
Lcurrency
Loan amount
The principal advanced.
ifraction per month
Period rate
The annual rate divided by twelve.
Nmonths
Term
The number of monthly payments.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate debt service coverage page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Debt Service Coverage, filed under Finance. Every number the guide produces comes from substituting into this one line.