PIK - how to model PIK if interest period and cash interst payment is quarterly?
Assume interest rate (annualized) is 6% and PIK interest is 5% (annualized). Should I model it on a quarterly basis? How to do that? Thanks!
(1 + 6%/4)^4 - 1 = 6.14%. Use this for the annual cash rate.
(1 + 5%/4)^4 - 1 = 5.09%. Use this for the annual PIK rate.
Isn't it specifically the opposit?
(1 + 6%)^(1/4) - 1= 1.467%
=> (1 + 1.467%)^4 - 1 = 6%
No
Same way you’d do anything else - divide the rate by 4, and compound quarterly.
Multiply the rate by the days in the period (quarterly will be 90-92 depending) divided by the year rate agreed to in the credit agreement (either 360 or 365).
I'm honestly not getting any of the math above. My interpretation:
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Quis autem sequi qui voluptas debitis provident. Rerum sapiente ut molestiae et. Corporis quis dolorem ullam amet quo aut.
Necessitatibus minima est eos eum ab labore vel ex. Vel qui vel sed a nihil facere. Autem omnis illo ut et quia quia. Eos id est non ratione animi.
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