Equity Returns 101 (IRR vs MOIC)
Interviews don’t want formulas—they want intuition: time, risk, and what’s driving value.
The 15-second explanation
Say it like this
“MOIC tells me how much money I make. IRR tells me how fast I make it. Shorter holds boost IRR. High leverage can boost IRR—but also increases risk. I care about what’s driving the return.”
Quick examples (simple numbers)
MOIC example
Invest $10
Get back $20
MOIC2.0x
MOIC is magnitude, not time.
Why IRR changes
2.0x in 3 yearsHigher IRR
2.0x in 7 yearsLower IRR
Same multiple. Different speed.
What returns matter by strategy
Core / Core+
- Stability, downside, cash yield
- Lower leverage, steady CoC
Value-add
- Execution + timing
- NOI growth + refi / sale
Opportunistic / development
- Binary risk, capital at risk
- Higher target IRR, longer duration