In this workout we're asked to forecast the interest expense and PIK notes We're given some information to start with, we've got the PIK debt borrowed at year 0 We've got the interest rate on the PIK debt at 6% every year And the time we saw maturity, in years is going to be 5 years So I've already started my answer, I've got the PIK beginning balance here What I'll do then is I'll add the PIK interest accrued onto it And I'll then subtract any PIK repayments in order to get to our PIK note ending balance So we know we took the PIK out in year 0 So I end year 0 with 7.4 million Now that's also going to be my starting amount in year 1 Now I need to calculate the PIK interest accrued and that's going to be the 6% (I'm going to lock onto that so I can copy it to the right) multiplied by the beginning balance There's no PIK repayment in year 1, in fact there's no PIK repayment until the last period So now my PIK note ending balance is the sum of the three items above Beginning plus interest, subtract any repayments So I can see that balance has gone up by the end of year 1 Let's copy that to the right and see what happens by year 5 So by year 5 if we've had no repayments, we end up with an ending balance of 10 million However our debt matures in year 5, so I now need to subtract the sum of the debt owed plus the interest Giving me a repayment of 10 million and my ending balance goes to 0