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We've designed this project to take about 2 hours to complete.Then you've got it right.
It's good to see people admit whiteboard interviews are a crummy system, I think you can learn way more from X hours of "do a task on a real computer with the internet" than you can from the same X hours of "do algorithms work on a whiteboard".
The objection, for me at least, is to "do 10*X hours of work on a real computer". It's bizarrely common to massively scale up the time investment when moving to this sort of task. And the answer is so easy - just don't do that!