PwC consulting math test

Question

compounding

Neue Antwort am 14. Okt. 2019

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Anonym A fragte am 14. Okt. 2019

Hi All,

I recently attended math test for consulting job in PwC. There were two questions I was unsure of.

Mike bought a Lamborgini for 100 $ in year 1966. The value of his Lamborghini at the end of year 1996 is 23,600$. At what rate did the value of Lambo increase per year?

We had to circle on of the solutions such as a) 10% b) 15% and so on.. How would you know the answer to this question?

Mike also had the option of investing in a fund that grew 25% per year in the same timeframe. How much more would he earn through this investment than by buying a Lambo?

I know that here we have to calculate growth of 25% for 30 years, but how should I do it?

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Answer 1

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Gori antwortete am 14. Okt. 2019

the answer is 20%, so 100*(1+X)^30=23600

If 1+x=x you will have the following 100*(x)^30=23600 .

(x)^30=236 so the answer is 1.199 the interest is 20%

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Answer 2

Anonym B antwortete am 14. Okt. 2019

You can use the formula for compounding interest - e.g. for the second question : 100 $ * (1+0.25)^31 = 100 974. 31 is the number of years. And you multiply by (1+ yearly growth rate) ^ number of years, as the amount is reinvested each year

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