hi in an interview I was asked what IRR would be after doubling your money after 1 and what it would be if doubling ur money after 2 years, i said 100% after 1 year and around 40% after 2 years. the interviewer followed up with if its 100% after one year, why would it not be 50% after two years?
My reply was because of the time value of money the interviewer never said anything after.
I wanted to ask whether my answer was correct or if not, what the correct answer would be?
| +106 | Is Everyone Too Bearish on PE? | 34 | 23h |
| +48 | Why would anyone do PE in long term in 2026? | 13 | 1d |
| +35 | MF Tech PE 2026 | 7 | 20m |
| +24 | Q&A: What It’s Actually Like Working at an Independent (Fundless) Sponsor | 4 | 3d |
| +22 | Do you think PE has actually helped you become a better entrepreneur? | 8 | 15h |
| +21 | Striking out in last rounds | 2 | 4d |
| +21 | UMM PE or High Paying Strat Finance? | 13 | 1d |
| +16 | Portfolio Marks | 8 | 12h |
| +15 | DELETE | 1 | 2d |
| +15 | Overwhelmed by amount of data / granularity | 3 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Assuming no dividend recap or something of the sort, IRR is just CAGR. (2/1)^(1/1)-1=100%; (2/1)^(1/2)-1 is ~41%.
Another way to think about it is that it’s not 50% because 100 growing at a 50% CAGR for two periods is (100 x 1.5 x 1.5) which is greater than 200.
Ut molestias inventore est amet corporis sequi. Repudiandae voluptas ducimus aliquam possimus. Voluptatibus dicta magnam ea.
Quae et maiores non fugiat accusantium consequatur suscipit. Ab tenetur est numquam quo ut aut et. Exercitationem quis pariatur quia ipsa tempore id ut.
Cum quia dignissimos quos vel. Adipisci tempora sunt cupiditate. Sit dolor animi vitae quidem omnis natus quo. Delectus vel qui deleniti nulla velit unde. Quia laboriosam dolor voluptas eius.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...