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Anonymous A

on Jul 27, 2021

Global

Simple interest/compound interest

Do you need to know these formulae and calculations for cases at MBB?

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Francesco

Coach

on Jul 28, 2021

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success: ➡ interviewoffers.com | Ex BCG | 10Y+ Coaching

Hi there,

Yes, you need to know the formulas for the growth rate (out of which, interest is a particular application):

Simple growth rate ⮕ May be present in the calculation of the market size after one year, following the market growth
Compound growth rate ⮕ May be present in Net Present Value or estimate of multiple years of growth for a variable at the same rate

Best,

Francesco

Andrew

Coach

on Jul 27, 2021

Recent Bain SF | UVa Recruiting Lead | Experienced on Both Sides of the Table

I don't think anyone would expect you to have any formulas (though I do appreciate your adherence to proper latinate plurals!) memorized in a case interview. I think people would expect you to understand how compounding works--particularly in cases of revenue growth or market growth (e.g., if sales are $100 in year 0 and grow 10% what are they in year 1? $110! What if they grow 10% again? What are they in year 2? $121!). Hope this helps!

I'd focus on internalizing concepts rather than memorizing formulas. Although the breakeven formula may be helpful to have in your pocket if the concept is eluding you.

Andrew

Agrim

Coach

on Jul 29, 2021

Top Awarded Coach | BCG Dubai Project Leader | Master Casing in only 3 Hours | 10y in Consulting | Free Intro Call

At minimum you need to know these concepts very well. Then come the formula. Simply memorising these formulae will do you no good.

Most case interviews will not involve taking the 15th power of (1 + 0.09) - or whatever. However, they will involve practical application of these concepts and formulae. Things like NPV, rule of 72, etc.

Udayan

Coach

on Jul 28, 2021

Top rated Case & PEI coach/Multiple real offers/McKinsey EM in New York /12 years recruiting experience

Unlikely you will have to calculate compound interest in a question. I would definitely know the concepts well and be able to explain it but not worry about memorizing compound interest formula.

Antonello

Coach

on Jul 28, 2021

McKinsey | NASA | top 10 FT MBA professor for consulting interviews | 6+ years of coaching

Hi, I confirm you should be able to manipulate these calculations and the main insights behind them

Best,
Antonello

Ken

Coach

on Jul 28, 2021

Ex-McKinsey final round interviewer | Executive Coach

Doesn't hurt but I wouldn't say it's expected.

Deleted user

on Jul 28, 2021

Yes!

Ian

Coach

edited on Jul 27, 2021

Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi there,

You need to know how to calcualte NPV into perpituity. You also need to be able to calculate NPV for year 1, 2, and sometimes year 3. You also need to be able to calculate a # in 1 to 2 years based on a CAGR or growth rate.