Carta-Specific Compounding Schedule Rules

Carta supports the following compounding period options:

Daily: Interest is compounded every day. Each day's interest is calculated on the previous day's principal + accrued interest.
Monthly: Interest is compounded monthly, on the same day as the accrual start date. For example, if interest starts on June 14, interest will compound on the 14th of every month.
Quarterly (calendar year): Interest is compounded on a fixed quarterly calendar schedule - 01/01, 04/01, 07/01, and 10/01, regardless of the accrual start date.
Semiannually: Interest is compounded every 6 months from the accrual start date.
Annually: Interest is compounded once per year on the anniversary of the accrual start date.

Precision of Carta's interest engine

Carta uses high-precision calculations for all accruals, accounting for:

Leap year extra days
Accurate day count fractions
Rounding consistency

To match Carta's calculations, we recommend replicating the structure of the compounding model using a spreadsheet that tracks:

Principal at each period
Number of days in the period
Time fraction of year (using a formula like YEARFRAC)
Simple interest per period
Running total of principal + interest

Reference this sample file for a breakdown of monthly compounding interest: Interest calculation breakdown.

Example - Compound interest (monthly):

Principal: $100,000
Accrual start date: November 14, 2024
Accrual end date: March 27, 2025
Rate: 6%
Compounding period: Monthly
Accrual period: Daily
Day count basis: Actual/365

Accrued interest = $2,205.18

Example - Compound interest (monthly):

Principal: $100,000
Accrual start date: November 14, 2024
Accrual end date: March 27, 2025
Rate: 6%
Compounding period: Monthly
Accrual period: Daily
Day count basis: Actual/365

Accrued interest = $2,205.18

As seen above, each month’s interest is calculated using the number of actual days between compounding dates and added to the growing principal. Use the YEARFRAC formula in the Time period (t) row to match the period in Carta correctly.

Understanding interest and dividend accrual in Carta