I am trying to teach myself some financial modeling and I was wondering if there is a reasonable way to forecast interest paid and NOT interest expense? I am looking at this company and on their CFs they have both interest expense and interest paid. I am assuming interest paid inludes the amortization of discount or premiums associated with the debt.
I guess this question is for the ibankers and equity research people on the forum…
Amortization is also based on the costs to issue debt, these are paid up front and then amortized over the course of the loan, this amortization expense is added to the interest paid to reach interest expense.
for any new I would recommend generally assuming it will be issued at par and try to estimate the costs to issue that debt. After that just treat it almost like a capex and depreciation, paid up front and then expensed over time.
for historical, unless you have more detailed information/ know it was because of a premium or discount I would just assume it’s a % of interest expense, based on historical %
That sounds reasonable. I spoke to a friend in research and he explained that if the diff between the two is relatively the same year after year then just straight-line it.