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.
The second after you ask someone for help is usually the second you figure it out anyways.
Usually has to do with explaining the question again
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