Mezzanine Finance Cost Calculator

Work out mezzanine finance cost instantly with clear inputs, formula shown and shareable results.

About Mezzanine Finance Cost Calculator

Mezzanine debt sits between senior loan and equity and is priced accordingly. Part of the return is paid as a cash coupon during the term and part accrues as payment in kind, compounding until repayment. The blended cost is the total divided by the facility and the term, which typically lands between fifteen and twenty percent a year.

Formulas

Mezzanine cost

Total = amount x cash coupon x years + amount x ((1 + PIK)^years - 1)

Blended rate

Blended = total cost / (amount x years)

Worked example

With the default values below, Mezzanine Finance Cost Calculator returns Total finance cost of $1,634,592.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Mezzanine facility amountminimum 0.01: 3,000,000
Cash couponaccepts 0–40 %: 14 %
Payment in kind accrualaccepts 0–30 %: 4 %
Facility termminimum 0.5 years: 3 years

Results

Total finance cost: $1,634,592.00
Cash interest paid: $1,260,000.00
Accrued payment in kind: $374,592.00
Blended annual cost: 18.16% %

Step by step

1Values used
2Mezzanine cost
3Blended rate
4Total finance cost= 1,634,592.00
5Cash interest paid= 1,260,000.00
6Accrued payment in kind= 374,592.00
7Blended annual cost= 18.16 %

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is the Mezzanine Finance Cost figure worked out?

Total = amount x cash coupon x years + amount x ((1 + PIK)^years - 1). Mezzanine debt sits between senior loan and equity and is priced accordingly.

Why accept payment in kind?

It preserves cash during construction or lease-up when the project cannot service interest. The price is a larger repayment at exit, compounded.

What values do I need to enter?

This calculator takes 4 inputs: Mezzanine facility amount, Cash coupon, Payment in kind accrual, Facility term. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.