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Liora Katzew

on Apr 18, 2020

Global

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This may be a stupid question but why did you x6 when you calculate the price to achieved 30% profit margin?

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Coach

edited on Apr 18, 2020

Senior Consultant BCG New York, Sydney & Moscow | INSEAD & Wharton MBA |Official Interviewer | Time Flexible

Hi Liora,

Thanks for your question!

Upon a quick look, it seems that the Price is charged monthly, whereas the Cost is calculated per rental. As the Number of rentals per month is 6, you need to multiple the Cost by 6 to get to the Monthly Cost. So your monthly Profit is your Monthly Price minus Monthly Cost, hence:
Margin = (Price (monthly) - Cost (monthly)) / Price (monthly) = (Price - Cost per rental * Number of rentals) / Price = (Price - $1.75*6) / Price

Hope this helps!

Best regards,

Vasily

1 comment

Liora Katzew

on Apr 18, 2020

Thank you so much !