Preferred Return Calculator
Calculate compounded preferred return on outstanding investor capital.
Calculated directly from the assumptions shown.
Continue in the full model.
Move from this screening result to the complete Preferred Equity Model.
Get the model · €49 incl. VATHow the Preferred Return calculation works
Accrued preferred return = capital × [(1 + annual rate)^years − 1].
Example calculation
€4.0m accruing at 8% for three years earns €1,038,848 of compounded preference. Capital plus accrued preference is €5,038,848 before any distributions.
How professionals use the result
Use this to estimate the claim before distributions. A full waterfall must account for contribution and distribution dates.
Common mistakes
- Applying simple interest when the agreement compounds
- Accruing on returned capital
- Ignoring interim contributions
- Confusing preferred return with guaranteed payment
Preferred Return Calculator FAQs
What does the Preferred Return calculator measure?
Calculate compounded preferred return on outstanding investor capital.
What formula does the Preferred Return calculator use?
Accrued preferred return = capital × [(1 + annual rate)^years − 1].
Is the result suitable for a final investment decision?
Use it as a transparent screening calculation. Validate deal-specific tax, timing, financing and legal assumptions in a complete underwriting model before making a decision.
Do I need an account?
No. The calculator is free and runs in your browser. FormulaPlanet does not store your projects, inputs or results.
Is any input sent publicly?
No calculation is public by default. A shareable link is only created when you explicitly choose to copy one; that link contains the assumptions shown in its URL.
Why might my spreadsheet give a different answer?
Differences usually come from timing, compounding, sign conventions, fees or a different definition of the numerator or denominator. Match every period and definition before comparing.
What should I review alongside this result?
Use this to estimate the claim before distributions. A full waterfall must account for contribution and distribution dates.
Which mistakes are most common?
Applying simple interest when the agreement compounds; Accruing on returned capital; Ignoring interim contributions; Confusing preferred return with guaranteed payment.