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Francesco

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Rental Cost reduction

Why the rental cost reduction should be 10*6 and 20*6? Where the "20" comes from?

  • New cost = Investment*Percentage to be paid by client – Savings in months 0-6 – Savings in months 6-12
  • New cost = 2.000*0,7 – 10*6 – 20*6 = 1.400k – 60k – 120k = $1.220k

Why the rental cost reduction should be 10*6 and 20*6? Where the "20" comes from?

  • New cost = Investment*Percentage to be paid by client – Savings in months 0-6 – Savings in months 6-12
  • New cost = 2.000*0,7 – 10*6 – 20*6 = 1.400k – 60k – 120k = $1.220k

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Hi Mavis,

Thanks for solving my case.

10K and 20K refer to the monthly savings in the first 6 months and in the second 6 months respectively.

Indeed:

  • Current Monthly Rent = 72k (from Exhibit 4)

MBB Final Round Case Graph

  • New Monthly Rent in month 0-6 = 62k (from Exhibit 5)
  • New Monthly Rent in month 6-12 = 52k (from Exhibit 5)

MBB Final Round Case Graph Smart Education

Thus the difference is 10K in the first 6 months and 20k in the second 6 months, for each month.

As a consequence:

  • Savings in months 0-6 = 10K*6
  • Savings in months 6-12 = 20K*6

I will update the case solution to make it more clear and I will add the K symbol in the first part of the equation, as I noticed it is now missing.

Thanks again for your question, please feel free to message me if you have additional ones.

Best,

Francesco

Hi Mavis,

Thanks for solving my case.

10K and 20K refer to the monthly savings in the first 6 months and in the second 6 months respectively.

Indeed:

  • Current Monthly Rent = 72k (from Exhibit 4)

MBB Final Round Case Graph

  • New Monthly Rent in month 0-6 = 62k (from Exhibit 5)
  • New Monthly Rent in month 6-12 = 52k (from Exhibit 5)

MBB Final Round Case Graph Smart Education

Thus the difference is 10K in the first 6 months and 20k in the second 6 months, for each month.

As a consequence:

  • Savings in months 0-6 = 10K*6
  • Savings in months 6-12 = 20K*6

I will update the case solution to make it more clear and I will add the K symbol in the first part of the equation, as I noticed it is now missing.

Thanks again for your question, please feel free to message me if you have additional ones.

Best,

Francesco

(edited)

Hi Francesco, thanks very much. But why savings in month 6-12 should be 20K*6 instead of 10k*6? Thanks again. — Mavis on Jul 10, 2020

Hi Mavis, since the current rent is 72K and the new one in month 6-12 would be 52K, the difference each month would be 20K. Thus in the 6-month period you get a saving of 20K*6. Hope this helps! — Francesco on Jul 10, 2020

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