Leveraged Buyout · LBO Modeling
Calculating Investment IRR in Excel
How would you use Excel to calculate an investment’s internal rate of return in an LBO model?
Interview question
- Difficulty
- Easy
- Topic
- Leveraged Buyout
- Subtopic
- LBO Modeling
What this question trains
This problem practices how to structure cash flows and timing in Excel so you can measure investment performance correctly. It tests whether you understand the difference between IRR and XIRR, how to sign initial outflows versus later inflows, and how to line up each cash flow with the right date or period. Interviewers ask this because IRR is a core LBO metric, and candidates need to show they can set up a clean model, choose the right Excel function, and think carefully about how timing affects returns.