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BahnCard 25 / 50 / 100 Question

Hi guys,

the following interview question came up recently:

BahnCard 25 costs 50 €
BahnCard 50 costs 200 €
BahnCard 100 costs 3000 €

(for international prepers: BahnCard is a loyalty card of the german railroad company that costs the stated amount and provides a discount which is given in the name)

1. How many kilometers do you have to travel to break even with each BahnCard (easy and solved)

2. From how many kilometers on exactly is BahnCard 100 the better choice?

To make it easy the interviewer assumed that 1km costs 1 €.

Thank you very much :)

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Clara
Coach
am 13. Nov. 2023
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Precisely for the high amount of questions (1) asked by my coachees and students and (2) present in this Q&A, I created the “Math & Formulas - Economic and Financial concepts for MBB interviews”, recently published in PrepLounge’s shop (https://www.preplounge.com/en/shop/prep-guide/economic_and_financial_concepts_for_mbb_interviews).

After +5 years of candidate coaching and university teaching, and after having seen hundreds of cases, I realized that the economic-related knowledge needed to master case interviews is not much, and not complex. However, you need to know where to focus! Hence, I created the guide that I wish I could have had, summarizing the most important economic and financial concepts needed to solve consulting cases, combining key concepts theorical reviews and a hands-on methodology with examples and ad-hoc practice cases.

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  • Economic concepts: Profitability equation, Break even, Valuation methods (economic, market and asset), Payback period, NPV and IRR, + 3 practice cases to put it all together in a practical way. 
  • Financial concepts: Balance sheet, Income statement/P&L and Performance ratios (based on sales and based on investment), +1 practice case
  • Market structure & pricing: Market types, Perfect competition markets (demand and supply), Willingness to pay, Pricing approaches, Market segmentation and Price elasticity of demand, +1 practice case
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Anonym B
am 26. Juli 2017

Answer should be 5600km.

1. Find total kms where: Avg. BC25 = BC100 (50 + x*0.75)/x = 3000/x

2. Find total kms where: Avg. BC50 = BC100 (200 + x*0.50)/x = 3000/x

The larger answer is the correct one.

Hint:

At ≈4000km BC100 would have a lower Avg. (cost / km) than BC25

At ≈5600km BC100 would have a lower Avg. (cost / km) than BC50

Anything beyond 5600km, BC100 would cost nothing, but BC50 would still carry an additional charge of €0.50/km.

4
Gelöschter Nutzer
am 26. Juli 2017
thanks!
M
bearbeitet am 6. Dez. 2023

Hello!

To determine from how many kilometers on the BahnCard 100 becomes the better choice, we need to compare the total cost of traveling with the BahnCard 100 to the cost of traveling without any BahnCard. Let's calculate it:

Cost of traveling with BahnCard 100 = 3000 €
Cost of traveling without any BahnCard = Total distance (in kilometers) * Cost per kilometer (1 €)

To find the breakeven point, we set these two costs equal to each other and solve for the total distance:

3000 € = Total distance * 1 €

Simplifying the equation:

Total distance = 3000 € / 1 €
Total distance = 3000 kilometers

Therefore, if you plan to travel more than 3000 kilometers in total, the BahnCard 100 becomes the better choice compared to traveling without any BahnCard.

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