The interest calculations here will be calculated on average balances. Let's start off with the revolver. I want the average of last year's ending revolver and this year's ending revolver, and I'm gonna take those numbers from the balance sheet. So we start by entering the average function, open brackets, go and find the last year's ending balance from the revolver, and then grab this year's ending balance.

I now need to multiply that by the interest rate assumption from the assumptions near the top of my model.

And the interest rate for the revolver is 2%. When I press enter, that gives me interest on the revolver of 14.2. Let's do exactly the same for long-term debt. Again, I'm gonna take the average of the balances from my balance sheet, starting with the prior year balance and then the current year balance, and then multiply that by the interest rate for long-term debt.

And the interest rate for the long-term debt is 3.5%, so slightly higher than for the revolver. And when I press enter, that gives me interest on long-term debt of 179.8. Lastly, we're gonna do exactly the same for cash and cash equivalents, although this time it's gonna be interest income. We're gonna use the average function again. Grab the prior year cash balance from the balance sheet and then the current year balance.

And then we multiply this by the interest rate on cash.

The interest rate on cash is just 1% and that's pretty typical that the interest rate on cash is much lower than the interest that they would pay on their borrowings. And when we hit enter, we can see that interest income is 1.6. The final thing we need to do before we copy our formulas to the right is to calculate net interest expense. So that's the interest expense on the revolver, plus the interest expense on long-term debt less interest income on the cash balance. I'm going to want to show that as a positive number in my income statement because that's the sign convention in my model. So I need to show net interest expense as a positive number.

Our net interest expense is 192.3. We can now copy our formula over to the right to our final forecast year and we now have our interest calculations complete for our five forecast years.