payment-in-kind interest

Italian translation: interesse su pagamento in natura

16:17 Sep 21, 2018
English to Italian translations [PRO]
Bus/Financial - Business/Commerce (general)
English term or phrase: payment-in-kind interest
"without prejudice to the maturity or realisation of any investments including scheduled **payment-in-kind interest**."

Grazie!
Giovanna Alessandra Meloni
Italy
Local time: 22:41
Italian translation:interesse su pagamento in natura
Explanation:
https://www.divestopedia.com/definition/6595/pik-interest


Definition - What does PIK Interest mean?
PIK, or payment-in-kind, interest is the option to pay interest on debt instruments and preferred securities in kind, instead of in cash. PIK interest has been designed for borrowers who wish to avoid making cash outlays during the growth phase of their business.

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Note added at 1 hr (2018-09-21 17:42:10 GMT)
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PIK interest is usually presented as additional securities, issuance of additional debt instruments or increases in the principal of existing debt. Generally benefiting the borrower, one setback is that a PIK instrument usually has a higher interest rate than its non-PIK equivalent (such as cash and other bank notes) in order to make it an attractive option for the collector.

For example, an IT company wishes to expand and construct a new building, but does not have enough cash at the moment. They opt to take out a loan using PIK interest with five years of maturity. The amount that they borrow, or their principal balance, is $1,000,000 with a 2% PIK interest compounding annually. During the first year, the interest will be $20,000 ($1,000,000 x 2%). This $20,000 will not be paid in cash yet, rather it will be added to the principal balance, so the principal note now becomes $1,020,000. During the second year, the 2% interest still applies to the principal note, so the interest for the second year will be $20,400 ($1,020,000 x 2%), making the total money loaned by year two $1,040,400. The same caluclation goes on through the fifth year until the agreed upon date of payment when the total amount is then paid in full.
Selected response from:

Angie Garbarino
Grading comment
Grazie mille!
4 KudoZ points were awarded for this answer



Summary of answers provided
4 +1interesse su pagamento in natura
Angie Garbarino


  

Answers


1 hr   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +1
interesse su pagamento in natura


Explanation:
https://www.divestopedia.com/definition/6595/pik-interest


Definition - What does PIK Interest mean?
PIK, or payment-in-kind, interest is the option to pay interest on debt instruments and preferred securities in kind, instead of in cash. PIK interest has been designed for borrowers who wish to avoid making cash outlays during the growth phase of their business.

--------------------------------------------------
Note added at 1 hr (2018-09-21 17:42:10 GMT)
--------------------------------------------------

PIK interest is usually presented as additional securities, issuance of additional debt instruments or increases in the principal of existing debt. Generally benefiting the borrower, one setback is that a PIK instrument usually has a higher interest rate than its non-PIK equivalent (such as cash and other bank notes) in order to make it an attractive option for the collector.

For example, an IT company wishes to expand and construct a new building, but does not have enough cash at the moment. They opt to take out a loan using PIK interest with five years of maturity. The amount that they borrow, or their principal balance, is $1,000,000 with a 2% PIK interest compounding annually. During the first year, the interest will be $20,000 ($1,000,000 x 2%). This $20,000 will not be paid in cash yet, rather it will be added to the principal balance, so the principal note now becomes $1,020,000. During the second year, the 2% interest still applies to the principal note, so the interest for the second year will be $20,400 ($1,020,000 x 2%), making the total money loaned by year two $1,040,400. The same caluclation goes on through the fifth year until the agreed upon date of payment when the total amount is then paid in full.


Angie Garbarino
Meets criteria
Specializes in field
Native speaker of: Native in ItalianItalian
PRO pts in category: 19
Grading comment
Grazie mille!

Peer comments on this answer (and responses from the answerer)
agree  Francesco Badolato: Anche solo "interessi in natura".
1 hr
  -> vero
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