Present and Future Values Equations, Transaction Costs and Exchange Rate, As Variables Integrated Into an Algorithm for Debt Restructuring Model

Santillan AG

Published on: 2019-08-14

Abstract

In order to find a fair balance between debtor and creditor in a debt scheme, it could be a complicated challenge, since if the creditor does not recover his money, this would affect his finances. Hence, to achieve a renegotiation between them, the creditor would demand some extra payment for moratoriums and other expenses. Therefore, the aim of the study focusses to demonstrate, through a model of equations that integrate the adjusted values derived from the original promissory notes, the costs incurred by this eventuality of default and finally, with the integration of the variable exchange rate of the currency in which the debt was acquired, all with the purpose of finding a fair balance between debtor and creditor. Therefore, it is suggested to modify the original algorithm proposed by García-Santillán and Vega-Lebrún and reformed in subsequent works to subsequently integrate the variable exchange rate of the currency in which the debt is referenced.