Verabrede dich zum Casen über das Meeting-Board, nimm an Diskussionen in unserem Consulting Q&A teil und finde gleichgesinnte Interview-Partner:innen, um dich auszutauschen und gemeinsam zu üben!
Zurück zur Übersicht

Return on investment for profits after investment

Hello everybody,

I have recently worked on the Desert City case in the Yale Casebook. The case involved a project with an initial investment of $110m and a yearly and constant profit of $22m. Is there a metric that allows me to say that we get a profit of 20% of our investment back each year similar to a return on investment but without having a discount rate?

Thanks for your help! 

2
1,9k
12
Schreibe die erste Antwort!
Bisher hat niemand auf diese Frage reagiert.
Beste Antwort
Gelöscht
Coach
am 11. Apr. 2019
Arthur D. Little Consultant | Coached 150+ cases | Created 10+ cases | Multiple offers

Dear Alexander, 

I just went through the case as to be able to provide an answer. 
From what I understand, you are looking for a metric to express the profit (22M) vs investment (110M) without having to use NPV. 

For this particular case, I would say you could rely on basic "common sense", which is a key skill as consultant. Often you won't have the time to go for the nitty gritty analysis and will have to use some "common sense". 

The client expects a payback period of 3 years. Let's just ignore the discounting for this: 

  • Given the profit of 22M, the payback period without discounting would be 110M/22M = 5 years
  • Given discounting will make the future profits lower today (dividing by (1+WACC)^years), the real payback period will be even longer
  • Therefore, the client should not progress with this project

I truly hope this is of any help to you! 

Kind regards, 
Sibren  

Sidi
Coach
am 8. Apr. 2019
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 400+ candidates secure MBB offers

Not sure I understand your question, beause the way I interpret it is trivial: we generate a Yearly RoI of 20%. The Total RoI is [Yearly RoI] x [Number of Years].

Cheers, Sidi

Ähnliche Fragen
Consulting
How should I explain a change in course at university? Will it be asked of me?
am 14. Apr. 2025
Global
10
3,6k
Beste Antwort von
Alessa
Coach
xMcKinsey & Company | xBCG | +200 individual & group coachings | feel free to schedule a 15 min intro call for free
81
10 Antworten
3,6k Aufrufe
+7
Consulting
Just did the Mckinsey Solve Game (January 2025) - got some questions/insights
am 24. Apr. 2025
Global
5
3,7k
Beste Antwort von
Hagen
Coach
#1 recommended coach | >95% success rate | 8+ years consulting, 8+ years coaching and 7+ years interviewing experience
41
5 Antworten
3,7k Aufrufe
+2
Consulting
Want IAPP AIGP (Artificial Intelligence Governance Professional) Exam sample Questions
am 14. Apr. 2025
Global
4
2,5k
Beste Antwort von
Hagen
Coach
#1 recommended coach | >95% success rate | 8+ years consulting, 8+ years coaching and 7+ years interviewing experience
56
4 Antworten
2,5k Aufrufe
+1
Wie wahrscheinlich ist es, dass du uns einem Freund oder Kommilitonen empfiehlst?
0 = Nicht wahrscheinlich
10 = Sehr wahrscheinlich
Vielen Dank für dein Feedback! Deine Meinung hilft uns, PrepLounge noch besser zu machen.