A community for students.

Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing


  • 5 years ago

Hi, do anyone know how to forecast interest cash flow if the company is using floating rate? I want to forecast for 10 years. First i think to use regression to predict the interest rate-and its definitely not accurate if you just regress it upwards 2nd just assume it to be fixed and do sensitivities on NPV later on. 3rd Make it fixed and increase the cost of debt-i think is not right. Can anybody here give suggestion to this problem, coz i need an accuracy when forecast interest cash flow, so that my IRR would be more accurate for project financing

  • This Question is Closed
  1. anonymous
    • 5 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Gecodine, to forecast interest rates you need to know how the floating rate is been calculated, normally mean reversion models are used to forecast this variations, there is a lot of information on the web. Also you can assume fixed interest rate and do some sensitivities to see if your interest rate is a primary variable for the valuation you are doing, and if it worth to do mean reversion model for that variable.

  2. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Sign Up
Find more explanations on OpenStudy
Privacy Policy

Your question is ready. Sign up for free to start getting answers.

spraguer (Moderator)
5 → View Detailed Profile

is replying to Can someone tell me what button the professor is hitting...


  • Teamwork 19 Teammate
  • Problem Solving 19 Hero
  • You have blocked this person.
  • ✔ You're a fan Checking fan status...

Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.

This is the testimonial you wrote.
You haven't written a testimonial for Owlfred.