Distribution Waterfall Schedule

This question practices the logic of a private equity waterfall, which is the ordered framework that determines who gets paid first and how carried interest is allocated. Candidates need to understand the role of return of capital, preferred return or hurdle concepts, catch-up mechanics, and the split of residual profits between limited partners and the general partner. Interviewers ask this because waterfalls test whether you can follow the economics of a fund structure, explain investor protections, and reason through how returns are distributed under the fund agreement.