Module VI· Interest Calculation MechanicsAdvanced
Question
How do you integrate an interest-rate hedge (IRS) in the debt schedule?
Answer
Split debt into hedged and unhedged portions. For the hedged portion, use fixed swap rate plus margin or model floating rate plus swap settlement. For unhedged debt, use floating base rate plus margin. Include hedge maturity, notional amortization, mark-to-market if needed, and cash settlements. Show effective blended interest rate.