Effective Cost: Stated Rate vs All-in Cost with Fees
This lesson is part of the course
In this lesson
You build the monthly cash flows of two venture debt offers, find each one's effective annual cost with IRR and see that the lower stated rate is not the cheaper loan.
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Lessons in this course
- Term Sheet Basics: Draw, Interest-Only, Amortisation & Runway Extension (Chart) Locked
- Warrant Coverage: From % of the Loan to Number of Warrants Locked
- Effective Cost: Stated Rate vs All-in Cost with Fees Locked
- Lender Returns: Final Payment, Warrant Value & XIRR Locked
- Venture Debt vs Equity: Dilution and Founders' Value at Exit Locked
- Covenants & MAC Risk: Testing a Minimum-Cash Covenant Locked
- RBF vs Venture Debt vs Equity: Which Is Cheapest at Which Exit? (Chart) Locked
- Default & Restructuring: Claim, Recovery Scenarios and Expected Value Locked