The formula to calculate the Loan to Cost (LTC) is:
\[ LTC = \frac{LA}{CC} \]
Where:
Loan to Cost (LTC) is a financial metric used to assess the ratio of the loan amount to the total construction cost of a project. It helps lenders and investors evaluate the risk and feasibility of financing a construction project.
Let's say the loan amount (LA) is \$500,000 and the construction cost (CC) is \$1,000,000. Using the formula:
\[ LTC = \frac{500,000}{1,000,000} = 0.50 \]
So, the Loan to Cost (LTC) is 0.50 or 50%.
