Help with PST Question

McKinsey PST
Recent activity on Feb 17, 2019
1 Answer
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Anonymous A asked on Feb 17, 2019

Hey there!,

Could someone please help with the following questions? I'm stuck D:

McKinsey PST question exhibit

Please refer to data above and help with the following question:

If total revenue in Exhibit 2 were to grow by 5% annually in the future and revenue from
Product B were to grow by 10% every year, which of the following would be the MINIMUM time
period required to see Product B represent more than half of the total revenue?
A) 10 years
B) 15 years
C) 20 years
D) 25 years

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Best answer
Rsan replied on Feb 17, 2019
Currently Prepping for Kearney. Looking for solid partners with 30+ cases.

To answer this question use the rule of 72. It tells you the time it will take for an amount or quantity to double

Which is basically n = 72/x , n = number of years, x = growth rate

It can be used for relative growths as well. Just like here you have been given the relative growth of product b vs all the products.

Here product b accounts for roughly 25% (34/125) of all the products, for it to become 50% of all the products it has to double. Hence

n = 72/(10-5){the difference b/w growths} = ~14 years hence the correct option is C 15 years the mimimum time required to double

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Rsan on Feb 17, 2019
Correct option B 15 years