I'm a student at Macquarie Uni and trying to solve a problem relating to project finance. I'm unable to understand how to solve for Refinance Upfront fee. My lecturer states the following
"The refinance fee should be calculated on the refinanced amount, inclusive of the drawdown for the upfront fee itself. Logically that is circular but it is quite simple, using high-school algebra, to avoid circular references and calculate the refinance upfront fee as a function of the debt balance excluding the drawdown and the upfront fee rate."
Any help will be deeply appreciated.
"The refinance fee should be calculated on the refinanced amount, inclusive of the drawdown for the upfront fee itself. Logically that is circular but it is quite simple, using high-school algebra, to avoid circular references and calculate the refinance upfront fee as a function of the debt balance excluding the drawdown and the upfront fee rate."
Any help will be deeply appreciated.
