How Do I compute the interest for a floating rate loan over time?

I am doing this practice modeling exercise, and part of the model is that I have to calculate the interest-only payments that are based on a floating rate loan based on the Libor swap rate. How would I model this?

Thanks for any input

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2 Comments

Goya Beans

PE

6y

A swap is when you swap your floating rate payments for fixed rate payments. So the interest on your loan will now be the libor swap rate instead of your floating rate.

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How Do I compute the interest for a floating rate loan over time?

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