IRR 2x Money in 3 Years is equal to what percentage?

IRR 2x Money in 3 Years is equal to what percentage?

• A. 15%
• B. 25%
• C. 35%
• D. 45%

Answer: (B)

The concept tested is the annualized return needed to double an investment over a given period when growth compounds each year (the compound annual growth rate, IRR for a three-year horizon). You want the rate r that makes the invested amount become 2x after 3 years, so (1 + r)^3 = 2. Solving for r gives r = 2^(1/3) − 1. The cube root of 2 is about 1.2599, so r ≈ 0.2599, or roughly 26%. Among the options, 25% is the closest match. Check: (1.25)^3 ≈ 1.953, close to 2 (slightly under). Higher rates overshoot more (for example, 35% gives about 2.46x, 15% gives about 1.52x). So the best fit is approximately 25%.

The concept tested is the annualized return needed to double an investment over a given period when growth compounds each year (the compound annual growth rate, IRR for a three-year horizon). You want the rate r that makes the invested amount become 2x after 3 years, so (1 + r)^3 = 2. Solving for r gives r = 2^(1/3) − 1. The cube root of 2 is about 1.2599, so r ≈ 0.2599, or roughly 26%.

Among the options, 25% is the closest match. Check: (1.25)^3 ≈ 1.953, close to 2 (slightly under). Higher rates overshoot more (for example, 35% gives about 2.46x, 15% gives about 1.52x). So the best fit is approximately 25%.