Hi,
How can I please calculate (1.25)^5 mentally?
Thanks a lot!
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Very helpful! It's good to know I don't need to focus on complex calculations
How did you approximate that the initial value would be added again after 2 years?
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Not needed - if you ever see yourself with a problem like this either you have done something wrong or there is a simple way to do it (e.g., Rule of 72)
Don't worry about this! You will rarely have to do complex calculations in your head. Consultants don't need to do this.
Instead, what I'd focus on is that at a 25% growth rate, you'll double in approximately 3 years (due to rule of 72) and then add the same amount again in the next 2 years approximately (due compound growth). In summary, therefore, you can triple in 5 years, so the answer should be around 3. (In reality, when I calculate electronically, the answer is 3.05)
Does this help?
Allen has an excellent approach! The goal of math in casing is not to see if you can multiple super hard numbers together like an engineer. The goal is generally, can you figure out quick-and-dirty approaches to complicated situations, to get to the general answer that matters.
Hi, here you can find some good approaches to quickly crack it: https://www.preplounge.com/en/consulting-forum/estimate-compounding-4962
Best
Antonello
Hello! I agree that you do not need to make complex calculations in your head and that your approach to solve difficult problems is more important.
Hope it helps,
All the best
GB
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