Calculate note interest and conversion shares

Separate the note’s balance from its conversion price

A modeled convertible note has two calculations: the balance eligible to convert and the price used to convert it. The app uses principal plus simple interest for the balance, then compares supported round-price, discount, and cap alternatives.

Read the signed agreement for which amounts convert and how interest is calculated. Compound interest, a different day-count basis, repayment terms, or amended economics can require a separate calculation. These are contractual inputs, not choices established by the software.

Apply the app’s simple-interest convention

Cap Table measures elapsed whole calendar days and divides by 365.25 to obtain fractional years. Its modeled balance is:

principal × (1 + annual rate × elapsed days / 365.25)

Assume principal of $100,000, an annual simple rate of 8%, and 365 elapsed days. Interest is $100,000 × 0.08 × 365 ÷ 365.25 = $7,994.52, rounded to cents. The balance is $107,994.52.

A calculation using exactly one year would produce $8,000 of interest. That difference comes from the stated day-count assumption. Verify the agreement’s basis before comparing the app with a closing spreadsheet.

Compare discount and cap prices

For a separate conversion-price illustration, assume a fixed converting balance of $108,000, a round price of $2, and a 20% discount. The discount price is $2 × (1 − 0.20) = $1.60.

If the applicable cap price is $1.50, the app’s supported comparison selects the lower $1.50 price. The modeled shares are $108,000 ÷ $1.50 = 72,000. If there were no cap, the discounted $1.60 price would produce 67,500 shares.

This isolates the price comparison. In a complete round, the price and capitalization can depend on other converting instruments, pool increases, and anti-dilution adjustments. Use the full round model rather than substituting this isolated example for the complete financing.

Distinguish maturity resolution from conversion

In the app, recording a note’s maturity as dealt with clears that follow-up condition. It does not record a cash repayment or remove the note from convertible models. A maturity date passing does not itself stop the model’s simple-interest calculation.

When a note converts, interest stops at its recorded conversion date for later-date readings. Inspect the linked conversion certificate and retain the reviewed closing calculation. See Record convertible instruments and Resolve attention items for the supported actions.