FORMULAS Flashcards
1
Q
Calculate the present value of interest savings
A
Interest savings = annual interest of old issue - annual interest of new issue
2
Q
Calculate PV of the investment costs
A
Include call premium, issuance costs, retirement of the old issue as well as any overlapping interest
3
Q
Net Present Value (NPV) = PV of interest Savings - PV of net investment costs
A
4
Q
Future Value Savings = old debt service - new debt service costs
A
