Quantitative Question on

Bain BCG GMAT McKinsey quantitative
New answer on Dec 30, 2020
4 Answers
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Anonymous A asked on Nov 24, 2020

Hello Everyone,

How do you please suggest I solve the following problem?

Navibank lends a total of $625 billion, a quarter of which is one-year term and the remaining are two-year terms. Assuming that it offers a fixed lending rate of 11% per year for loans of all terms, how much does the bank earn from the lending interest?

Thank you

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Henning
Expert
replied on Nov 24, 2020
Bain | passed >15 MBB interviews as a candidate

Calculate this separately for the two term structures:

  • $625B * 0.25 * 11% = $17B from the one-year loans
  • $625B * 0.75 * 11% * 2 = $103B from two-year loans, half of which in year 1, half of which in year 2.

If they are lending the same amount ($625B) every year, the sum of these 2 are what they earn in interest per year.

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Ian
Expert
Content Creator
replied on Nov 24, 2020
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi,

I have a hunch that you're the same person that has asked the 3 other quant questions!

I think you're approaching this wrong (if I may).

Rather than spamming the Q&A to get the answer, you need to learn the logic.

Same goes with case types (you can't just memorize every case framework out there...you have to learn how to think about every case prompt individually).

So, I highly recommend you ernestly try to solve each of these problems on their own.Then, post here with your reasoning/thinking and then we can comment on that.

You're not going to ace the case by getting every answer to every question in the world. Rather, you'll learn by figuring out how to think about each one you see! Also, a coach can help you with this :)

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Clara
Expert
Content Creator
replied on Nov 26, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

It´s an easy one:

  1. Split the 2 quantities
  2. Apply the fix rate formula to each of them separate
  3. Sum the interest amounts

Best,

Clara

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Henning gave the best answer

Henning

Bain | passed >15 MBB interviews as a candidate
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