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Bain Business Case

Hi,

This is a question from Bain sample case. I attach the question and relevant graphs below. Would appreciate if someone can give me hints on how to solve this problem. Thank you very much!

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Ian
Coach
am 25. Jan. 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 calculate the import parity price from the last exhibit (2.0 + .5 times 10%)

Then, calculate the total costs of production (material 1 and 2) from the 1st exhibit

Finally, look at the amount of product produced, the total cost for it, and the total revenue to get your answer!

Z
am 24. Feb. 2023
Hi Ian,

Price = (2k+0.5k) * 1.1 = 2.75k per ton
Revenue = 10k * 2k(local) + 18k * 2.75k (export) = 69.5m
VC = 1.5k*14kty + 1k*18kt = 39m
FC = 14m
EBITDA = 69.5 - 39 -14 = 16.5m which doesnt match any of the answer

However, if for the export price I do:
Price = 1.5k + 0.4k * 1.0666 = 2.02k
Keep everything else constant
EBITDA = 56.36 - 39 -14 = 3.36 which is still off but a bit closer.

I feel I've completely missed something here - keen to get your thoughts
Clara
Coach
am 26. Jan. 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Could you share where you obtained this?

Cheers, 

Clara

V
am 27. Jan. 2021
Yes
V
am 27. Jan. 2021
https://mconsultingprep.com/wp-content/uploads/2019/10/Business-Case-Test-2-Question-fixed.pdf
V
am 27. Jan. 2021
https://mconsultingprep.com/wp-content/uploads/2019/10/Business-Case-Test-2-Context.pdf
G
am 25. Apr. 2023

option 1: EBITDA is -928.57k

option 2: EBITDA is +1M

so should be C?

1
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