I have to build a waterfall with monthly periods the goes Pref->ROC->Split->Split. Normally this would be pretty straight forward but the splits have "hurdles" that are "x percentage of total distributions" to GP type of things. Anyways my question is about the Pref accrual calculation.
The LP agreement says 15% per annum compounded quarterly, computed for the actual number of days for which the preferred return is being determined.
I used -(FV((1+EFFECT(15%,4)^(1/365)-1),Current Period-Past Period,0,Beginning Balance)+Beginning Balance
My CFO seems to think this results in compounding monthly and quarterly. Basically doubling up. because the beginning balance is the previous months ending balance which is principal + accrued pref.
Am I doing this correctly? Thanks.