Mental Math

Gravestone Inc.
New answer on Oct 22, 2021
3 Answers
asked on Oct 12, 2021

What is an easy way to calculate (1.04)^54?

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replied on Oct 12, 2021
Bain | EY-Parthenon | Roland Berger |Former Head Recruiter | Market Sizing

You need to know how to work with exponentials.

1^(a*b) = 1^a^b

1.04^54 = (1.04^9)^6 = ~1.4^6 = (~1.4^2)^3 = ~2^3 = 8

But… why do you ask? Howcome this is necessary in a case interview?

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Cheryl on Oct 13, 2021

It is a question from the case, Gravestone Inc.

Pedro on Oct 13, 2021

You are not expected to know how to do this type of mental calculation in an interview, so don't worry about it. You not expected to know financial heuristics.

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replied on Oct 13, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi Cheryl,

Literally a waste of time to figure this out! This will not be in a case and this is definitely not what's expected in mental math! (Checkout the Preploung mental math exercises for a better idea…though even some of their advanced/hard ones are still too much!)

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Anonymous A on Oct 13, 2021

I disagree. They are likely testing if you know the rule of 72. At a 4% growth rate, an investment should double every 18 years. So over the span of 54 years, the investment should 8x (at a 4% growth rate).

Pedro on Oct 13, 2021

I disagree with you Anonymous A. You may see it in a casebook, but it would be complete absurd to ask this in a real consulting interview. Knowing math and arithmetics is a criteria to get into consulting. Knowing financial heuristics (e.g. the rule of 72) is not. May be a nice question for investment banking. Never for consulting.

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updated an answer on Oct 22, 2021
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Such specific questions are actually easier than they look - another method to solve this would be using the 72-rule

72 divided by % growth rate give you the time to double in years

Here, you are working with 1.04 which is nothing but 1 + 4%. So the question can be assumed as a 4% growth rate fund for 54 years

72 divided by 4% = 18 years

so in 54 years the money will double 3 times

After 18 years 1 will become 2 growing at 4%

After 36 years it will become 4

After 54 years it will become 8


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Bain | EY-Parthenon | Roland Berger |Former Head Recruiter | Market Sizing
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