Carried Interest Calculator
Carried interest ('carry') is the share of investment profits retained by general partners (GPs) of private equity, venture capital, and hedge funds as their primary performance-based compensation.
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📐 Formula
💡 Practical Example
$50,000,000 Private Equity fund exits for $120,000,000 after 5 years (8% hurdle rate, 20% carry). - Total Net Profit: $70,000,000. - LP Preferred Hurdle Return: $50,000,000 × [(1.08)⁵ - 1] = $23,466,404. - Excess Profit Subject to Carry: $70,000,000 - $23,466,404 = $46,533,596. - General Partner (GP) Carried Interest Payout (20%): $9,306,719. - Limited Partners (LP) Total Proceeds: $110,693,281.
📖 About Carried Interest Calculator
Carried interest ('carry') is the share of investment profits retained by general partners (GPs) of private equity, venture capital, and hedge funds as their primary performance-based compensation.
To use the Carried Interest Calculator, enter your Total Fund Capital Invested, Total Exit Value / Proceeds, Hurdle Rate (Preferred Return) and other values. The calculator instantly computes Total Net Investment Profit, Hurdle Return to LPs and more. Results update in real time as you change any input — no submit button needed.
How to Use This Calculator
Enter your Total Fund Capital Invested (e.g. 50000000 in ), Total Exit Value / Proceeds (e.g. 120000000 in ), Hurdle Rate (Preferred Return) (e.g. 8 in %), General Partner Carry Percentage — choose from options such as 20% Carry (Standard), 25% Carry (Top Tier), 15% Carry, and Fund Duration (e.g. 5 in years). Results update instantly as you type — no submit button or page reload required. Adjust any value to compare scenarios side by side.
The Formula
Total Profit = Total Exit Value - Total Invested Capital
Preferred Hurdle Return = Invested Capital × [(1 + Hurdle Rate)^Years - 1]
GP Carried Interest = (Total Profit - Preferred Hurdle Return) × Carry %
LP Net Proceeds = Total Exit Value - GP Carried Interest
Worked Example
50,000,000 Private Equity fund exits for 120,000,000 after 5 years (8% hurdle rate, 20% carry).
- Total Net Profit: 70,000,
000.
- LP Preferred Hurdle Return: 50,000,000 × [(1.08)⁵ - 1] = 23,466,
404.
- Excess Profit Subject to Carry: 70,000,000 - 23,466,404 = 46,533,
596.
- General Partner (GP) Carried Interest Payout (20%): 9,306,
719.
- Limited Partners (LP) Total Proceeds: 110,693,
281.
Understanding Your Result
Evaluate your result against the specific financial decision driving this calculation. Small input differences can create large output swings — run two or three scenarios (conservative, base, optimistic) to understand the range of outcomes. For decisions involving more than a month's income, validate your result against a second source or consult a certified financial planner (CFP) or CPA depending on the tax implications.
💡 Financial Planning: Expert Principles & Risk Awareness
- All calculations assume fixed rates and idealized conditions. Real-world results vary due to market volatility, inflation, fees, and taxes.
- The Consumer Financial Protection Bureau (CFPB) recommends consulting a certified financial planner (CFP) for decisions involving significant sums.
- Run at least three scenarios: optimistic, pessimistic, and most-likely — to understand the full range of potential outcomes before committing.
- Inflation averages 2–3% annually in the US (Federal Reserve target). Long-term projections that ignore inflation significantly overstate future purchasing power.
- Tax treatment varies widely by account type (IRA, 401k, brokerage), jurisdiction, and income level. Verify tax implications with a CPA before acting.
- Compound interest works for you in savings/investments and against you in debt. The difference of even 1% in rate, sustained over decades, is enormous.
- Emergency funds (3–6 months of expenses) should be established before optimizing for returns — financial security precedes financial growth.
- Financial projections older than 12 months should be recalculated. Interest rates, tax brackets, and market conditions shift materially year to year.
Results are for informational and educational purposes only. Always verify critical decisions with a qualified professional.