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.

100 credits included

Practise this question

Create your free account to answer it, see the model answer and get your answer graded.

Sign in to continue

Your account is free and comes with 100 credits. Once signed in, you come back right here.