How would one go about modeling a loan with a 4% prepayment and 2% charge-off (beginning in month 12)? It's a fully amortizing loan, so I'm a little unclear on how to model this. I thought the fully amortizing means there's a fixed payment each period, is that right? Is there a good template someone could recommend?
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do you have to size the loan too or were you given a quantum?
it can be either straight-line amort with a specific tenor (annual amortization = quantum / tenor) or you can sweep cash to amort the loan ASAP (annual amortization = unlevered free cash flow - interest expense)
note there’s a few complications with the latter (interest circularity, calculating cash for debt service (UFCF is a proxy), min/max, etc)
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