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Anonymous A
on Jun 10, 2025
USA
Question about

Annual Growth Rate -- when to account for this in year 1?

Hi! I have a question about Question 3 in this case (screenshot below). I am wondering why in Year 1, the 20% growth rate isn't accounted for? It seems it is assumed that this year-on-year growth doesn't begin until year 2, and I am wondering how you would know this -- when solving the case, I was unsure if I should do as you did, or multiply the value in year 1 by 1.2. 

In general, I am unsure when growth rate should be accounted for in year 1 and when it shouldn't. I have seen numerous cases that similarly do not account for the growth percent until year 2, but I have also seen numerous cases account for the growth starting in year 1. Is there any convention here, or should I just ask the interviewer which I should do?

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Top answer
on Jun 10, 2025
#1 rated McKinsey Coach | top MBB coach

Hi there!

Thanks for the question. I'm happy to clarify, as the author of the case.

Basically, the assumption is that year 1 is the base year. 

So we're going to see the increase building from the year after that (year 2). 

Best,
Cristian

Anonymous A
on Jun 10, 2025
Thanks! Is this something I should always assume in cases? I've noticed some cases account for growth in year 1 as well, so I am unsure when to do so and when I shouldn't?
Thanks!
on Jun 10, 2025
#1 rated McKinsey Coach | top MBB coach
To my mind, I would assume this to be true. But if in doubt, it's always best to check it with the interviewer.
Hagen
Coach
edited on Jun 12, 2025
#1 recommended coach | >95% success rate | 8+ years consulting, 8+ years coaching and 7+ years interviewing experience

Hi there,

I would be happy to share my thoughts on your question:

  • I agree that it is unclear whether "year 1" is "year 0" or "now", where no growth has happened yet. In a real case study, I would strongly advise you to clarify such things. Unfortunately, this is not possible with these types of case studies.

You can find more on this topic here: How to succeed in the final interview round.

If you would like a more detailed discussion on how to best prepare your application files, for your upcoming pre-interview assessments and/or interviews, please don't hesitate to contact me directly.

Best,

Hagen

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