Texas Statutes
Chapter 1204 - Interest Rate
Section 1204.004. Computation of Net Interest Cost

Sec. 1204.004. COMPUTATION OF NET INTEREST COST. (a) In this section:
(1) "Discount" means an amount equal to the principal amount at par value of an issue or series of public securities plus any accrued interest to the date of delivery minus the total sum of money paid to the public agency.
(2) "Premium" means an amount equal to the total amount of money paid to the public agency for an issue or series of public securities minus:
(A) the principal amount at par value of the issue or series; and
(B) any accrued interest to the date of delivery.
(b) The net interest cost of an issue or series of public securities is the total of all interest to become payable on the issue or series through the final scheduled maturity date of the issue or series, plus any discount or minus any premium included in the price paid for the issue or series.
(c) The net interest cost of an issue or series of floating rate public securities is the total of all interest to accrue from the date of delivery and become payable on the issue or series through any date net interest cost is computed on the issue or series:
(1) plus, in the case of a discount, the figure obtained by multiplying the dollar amount of the discount by a fraction, the numerator of which is the aggregate number of public security years to the date of the net interest cost computation and the denominator of which is the aggregate number of public security years to the scheduled final maturity date of the floating rate public securities; or
(2) minus, in the case of a premium, the figure obtained by multiplying the dollar amount of the premium by a fraction, the numerator of which is the aggregate number of public security years to the date of the net interest cost computation and the denominator of which is the aggregate number of public security years to the scheduled final maturity date of the floating rate public securities.
(d) If any portion of an issue or series of public securities is subject to a mandatory redemption before the scheduled maturity that at the time of delivery of the public securities is scheduled to occur on a specific date or dates:
(1) the net interest cost is computed as if the face amount of public securities required to be redeemed on each earlier date were scheduled to mature on that earlier date;
(2) the net interest cost includes any redemption premium required to be paid on any mandatory redemption date; and
(3) any other form of compensation, whether due on an optional or mandatory prepayment or redemption, may not be included in the net interest cost.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1, 1999.