chaojimali

The amt you need to supply for a defeasance is the principle + Interest portion discounted at the t-bill rate. if you were to pay off a loan without a prepay penalty it would just be the principle you would need to pay off.

stating this another way:

To repay a loan without a prepay penatly = principle on loan

To repay a loan with a defeasance prepay penalty = principle + int that would have accrued under normal payment/1+t-bill rate