The Effective Interest Rate: IRR of All Cash Flows, Annualised with POWER
This lesson is part of the course
In this lesson
You list every contractual cash flow including the fee, find the effective interest rate with IRR and turn a half-yearly rate into an effective annual rate with POWER.
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Lessons in this course
- Why Effective Interest: Coupon, Fees and Straight-Line Spreading Locked
- The Effective Interest Rate: IRR of All Cash Flows, Annualised with POWER Locked
- The Lender's Schedule: Carrying Amount × EIR = Interest Income Locked
- Bonds at a Discount or Premium: Accreting and Amortising to Par Locked
- The Borrower's Side: Transaction Costs, Interest Expense and the Liability Locked
- Zero-Coupon and Step-Up Instruments: No or Rising Coupons, One Smooth Rate Locked
- Changed Expected Cash Flows: Recalculated Carrying Amount & Catch-Up Adjustment Locked
- Journal Entries & Roll-Forward: Opening, Interest, Cash, Closing Locked