Arbitrage Rebate Calculations
In preparing arbitrage rebate calculations, Pinnacle evaluates the cash flows from investments made with gross proceeds of the Bonds. This evaluation includes an analysis of the relevant funds associated with the Bonds, such as reserve funds, construction funds, capitalized interest funds, debt service funds, etc. The cash flows from includable funds are future valued to the computation date using the bond yield to determine if the issue has accrued a rebate liability
In determining the rebate amount, we perform calculations using the future value method as required by the Regulations. On each engagement we verify the yield on the bonds, compute the investment yield and cash flow on each investment, determine the composite yield on all investments, compute the cumulative rebate amount, and determine the amount of arbitrage associated with each investment. More complex bond issues may also include the calculation of transferred proceeds associated with a refunding issue, the allocation of commingled funds, and the application of the universal cap rules.