Quarterly Promote Hurdle Calc without XNPV

Hi, I'm trying to calculate a multi level dead by deal and fund level promote. I know I can use XNPV to calculate the correct hurdle, BUT would love to be able to calculate this with a simple corkscrew (accruing interest at the % of the promote and then paying it off). I thought if I accounted for compounding and odd quarter days and leap years I should be able to get the IRR test spot on.

However, while this works for the first hurdle it creates completely whacky IRRs for that level and also don't meet the hurdle even though the cumulative rates used to accrued interest theoretically should.

I can't seem to post the url to my ss pic so """https://ibb.co/cTjYRFF"""

I've seen this work for monthly and quarterly models, but don't have an example of this being done in a quarterly model.

 

Haha so nevermind, I thought I had tried this multiple times but I guys something was off.

Anyhow if I accrue the full % amount of interest at the second hurdle and then subtract the interest accrued further up the waterfall at the first hurdle, no matter when it actually gets paid the IRR test still says all good... So infinitely better than using XNPV (which can go sideways if cashflow flip too much) as far as I can tell.

 

Et quidem hic expedita deserunt. Deleniti ut eaque ut rem unde eum. Sunt nisi debitis dolor et error. Dolor aperiam et tenetur.

Career Advancement Opportunities

May 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. New 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 04 97.1%

Overall Employee Satisfaction

May 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

May 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

May 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (87) $260
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (67) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (146) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
kanon's picture
kanon
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
GameTheory's picture
GameTheory
98.9
9
Kenny_Powers_CFA's picture
Kenny_Powers_CFA
98.8
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”