Do you need to know these formulae and calculations for cases at MBB?
(edited)
Simple interest/compound interest
Overview of answers
Upvotes
Best answer
Hi there,
Yes, you need to know the formulas for the growth rate (out of which, interest is a particular application):
- Simple growth rate ⮕ May be present in the calculation of the market size after one year, following the market growth
- Compound growth rate ⮕ May be present in Net Present Value or estimate of multiple years of growth for a variable at the same rate
Best,
Francesco
Was this answer helpful?
I don't think anyone would expect you to have any formulas (though I do appreciate your adherence to proper latinate plurals!) memorized in a case interview. I think people would expect you to understand how compounding works--particularly in cases of revenue growth or market growth (e.g., if sales are $100 in year 0 and grow 10% what are they in year 1? $110! What if they grow 10% again? What are they in year 2? $121!). Hope this helps!
I'd focus on internalizing concepts rather than memorizing formulas. Although the breakeven formula may be helpful to have in your pocket if the concept is eluding you.
Andrew
Was this answer helpful?
At minimum you need to know these concepts very well. Then come the formula. Simply memorising these formulae will do you no good.
Most case interviews will not involve taking the 15th power of (1 + 0.09) - or whatever. However, they will involve practical application of these concepts and formulae. Things like NPV, rule of 72, etc.
Was this answer helpful?
Unlikely you will have to calculate compound interest in a question. I would definitely know the concepts well and be able to explain it but not worry about memorizing compound interest formula.
Was this answer helpful?
Hi, I confirm you should be able to manipulate these calculations and the main insights behind them
Best,
Antonello
Was this answer helpful?
Doesn't hurt but I wouldn't say it's expected.
Was this answer helpful?
Yes!
Was this answer helpful?
Hi there,
You need to know how to calcualte NPV into perpituity. You also need to be able to calculate NPV for year 1, 2, and sometimes year 3. You also need to be able to calculate a # in 1 to 2 years based on a CAGR or growth rate.
(edited)
Was this answer helpful?
Related Cases
Company case by Bain & Company
Style:
You have inherited the “Old Winery” from your grandfather, a winery that has been family-owned for five generations and can be dated back to the 16th century.Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in a conventional way, i.e. they
...
You have inherited the “Old Winery” from your grandfather, a winery that has been family-owned for five generations and can be dated back to the 16th century.Half of the eleven hectares are
...
(Open whole case)
118.1k
Times solved
Intermediate
Difficulty
Expert case by Francesco
Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US.The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadv
...
Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US.The mission of SmartBridge is to help as many stude
...
(Open whole case)
31.6k
Times solved
Advanced
Difficulty
Expert case by Bernard
The COVID-19 pandemic has killed millions of people worldwide and led to devastating economic impact. A vaccine is one of the biggest hopes for stopping the pandemic. The World Health Organization (WHO) is working with multiple stakeholders to ensure groups at higher risk of becoming infec
...
The COVID-19 pandemic has killed millions of people worldwide and led to devastating economic impact. A vaccine is one of the biggest hopes for stopping the pandemic. The World Hea
...
(Open whole case)
18.3k
Times solved
Advanced
Difficulty
Expert case by Luca
Espresso Whatelse is an Italian company that produces coffee and espresso machines since 1908. It is the Italian market leader and has a strong presence overall in Europe. In 2019, Espresso Whatelse has increased its revenues but it has seen declining profit margin.Your client wants to understa
...
Espresso Whatelse is an Italian company that produces coffee and espresso machines since 1908. It is the Italian market leader and has a strong presence overall in Europe. In 2019, Espr
...
(Open whole case)
17.4k
Times solved
Advanced
Difficulty
Expert case by Francesco
Style:
Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client?
Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client?
(Open whole case)
13.6k
Times solved
Intermediate
Difficulty
Content Creator
#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching
4,522
Meetings
44,983
Q&A Upvotes
392
Awards
1618 Reviews
