# Carried Interest Calculator

URL: https://speedycalculator.com/calculators/finance/carried-interest/
Last updated: 2026-10-25

> The carried interest calculator splits a private equity or venture fund's profit between the limited partners (investors) and the general partner, with a hurdle rate (preferred return) and an optional GP catch-up.

## Inputs

- Initial fund value (capital committed)
- Final fund value
- Holding period (years)
- Hurdle rate (%)
- Carried interest (%)
- GP catch-up

## Results

- Fund profit
- Fund return
- Preferred return to investors
- Carried interest to the GP
- Profit to limited partners
- LP net annual return

## Formula

```
Profit = final fund value − initial fund value
Preferred return = initial × [(1 + hurdle)^years − 1]
With full catch-up: carry = carry % × profit once profit is large enough; without: carry = carry % × (profit − preferred return)
```

## Explanation

Carried interest – typically 20% of profits – is how fund managers are mainly paid, on top of a management fee. A hurdle (often 8%) means investors get their preferred return before the GP earns any carry; a catch-up then lets the GP reach its full 20% share.

### How to use the Carried Interest Calculator

- **Initial fund value (capital committed)**
- **Final fund value**
- **Holding period**
- **Hurdle rate**
- **Carried interest**
- **GP catch-up**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the initial and final fund values, the holding period, the hurdle rate, the carry percentage and whether there is a GP catch-up.

### Tips

- Take figures from the same financial statements and the same fiscal year.
- Compare ratios with companies in the same industry, not across industries.
- Use several valuation measures together; no single ratio tells the whole story.
- Market prices change every second – refresh the share price before you rely on a result.

### Common mistakes to avoid

- Mixing per-share figures with company totals.
- Using trailing earnings for one company and forward earnings for another.
- Forgetting dilution from options and convertible securities.

### Inputs explained

FieldWhat to enterInitial fund value (capital committed)Amount in your currencyFinal fund valueAmount in your currencyHolding periodIn yearsHurdle rateIn %Carried interestIn %GP catch-upChoose one: Yes (100% catch-up), No

### What each result means

- **Fund profit** = [Final fund value] - [Initial fund value (capital committed)]
- **Fund return** = [Fund profit]÷[Initial fund value (capital committed)]×100
- **Preferred return to investors** = [Initial fund value (capital committed)]×((1 + [Hurdle rate]÷100)^[Holding period] - 1)
- **Profit to limited partners** = [Fund profit] - [Carried interest to the GP]
- **LP net annual return** = ((([Initial fund value (capital committed)] + [Profit to limited partners])÷[Initial fund value (capital committed)])^(1÷[Holding period]) - 1)×100

### Example values

How the main result changes when **Initial fund value** changes and everything else stays at the example values above:

Initial fund value (capital committed)Carried interest to the GP5,000,0003,000,0007,500,0002,500,00010,000,0002,000,00012,500,0001,500,00015,000,000020,000,0000

## Worked example

Inputs — Initial fund value (capital committed): $10,000,000; Final fund value: $20,000,000; Holding period: 5 years; Hurdle rate: 8 %; Carried interest: 20 %; GP catch-up: Yes (100% catch-up).

Results — Fund profit = $10,000,000.00; Fund return = 100 %; Preferred return to investors = $4,693,280.77; **Carried interest to the GP = $2,000,000.00**; Profit to limited partners = $8,000,000.00; LP net annual return = 12.47 %.

## FAQ

**What is carried interest?**
The general partner's share of a fund's profits, usually 20%.

**What is a hurdle rate?**
The minimum return investors must receive before the GP earns carry.

**What does catch-up mean?**
After the hurdle, the GP receives most or all profits until it has its full carry share.

**What formula does the Carried Interest Calculator use?**
Profit = final fund value − initial fund value.