PIK Interest Question
So my understanding of PIK interest is that instead of cash interest, the interest gets added to the debt amount.
So for example, If there's $100 of debt and the PIK interest rate is 10%, the interest would be $10 and the new debt would be $110. In the next fiscal year then, will the PIK interest be 10% of $110 or stay at $10? Basically I'm asking if the interest rate applies to the new overall debt amount or just the initial principal amount. Thank you!
PIK interest is almost always compounding interest, so it'd be 10% of $100, then 10% of $110, then 10% of $121..
Thank you!
It's compounding. It also generates phantom income, so be careful.
Nulla consequatur quasi quidem et. Exercitationem nulla laudantium quis ea explicabo sit similique provident.
Debitis natus molestias dolorem saepe suscipit voluptate quos. Qui beatae beatae vitae rem qui eligendi debitis. Maiores ut omnis et quis harum est qui quibusdam. In odio doloremque molestiae amet quis sit incidunt. Sit officia minima et et sint. Optio rem corrupti eligendi repellendus nulla qui.
Illo sunt voluptates aut expedita ut unde sit. Quae facere ut natus. Natus sed harum modi cupiditate minus similique. Tempora delectus eaque est culpa consequatur perspiciatis.
Molestiae accusantium laudantium est voluptas ipsa omnis soluta nam. Vel itaque quod magnam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...