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Which of the following debt repayment profiles involves a growing principal amount over time?Pay in kind debtEquityMezzanine financeSenior Debt

Question

Which of the following debt repayment profiles involves a growing principal amount over time?Pay in kind debtEquityMezzanine financeSenior Debt

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Solution

The debt repayment profile that involves a growing principal amount over time is Pay in kind debt. This is because Pay in kind (PIK) debt allows the borrower to pay interest with additional debt, rather than cash. This means that the principal amount can increase over time if the interest is not paid off.

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