PRACTICE · LEVEL 2 · ABOUT 8 MIN
Not triedFloating-rate interest and a cash sweep
A $200M term loan pays SOFR + 4.00% with a 0.50% SOFR floor. The SOFR assumption for the year is 4.30%.
Mandatory amortisation is 1% of the original balance a year. After interest, taxes, capex and working capital, $30M is available for debt, and 100% of what's left after mandatory repayment is swept.
Assumptions
- Interest on the beginning-of-year balance (no circularity).
- The floor applies to the benchmark, not the all-in rate.
- Year 2 uses the same SOFR assumption.
Set 1 of 4