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Total Commissions per Product of RetailBankingCo

[Updated] Retail Banking Profitability
New answer on Jul 06, 2023
3 Answers
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Anonymous A asked on Jul 03, 2023

Total Commissions per Product of RetailBankingCo

Total comm. per product RetailBankingCo = $4 + $80 × 5% × 3 = $16 < $80

If it is per product why is it multiplied by 3

And why is it multiplied by 3, not 4?

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Cristian
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replied on Jul 06, 2023
#1 rated MBB & McKinsey Coach

Hi there, 

Basically, you need to multiply by the average lifetime of a product, which is 3 years, not 4. 

Best,
Cristian

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Hagen
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updated an answer on Jul 03, 2023
#1 Bain coach | >95% success rate | interviewer for 8+ years | mentor and coach for 7+ years

Hi there,

Thank you very much for this question. I would be happy to share the solution to it:

  • In section “Background”, it is stated "The average lifetime of these four products is three years.”
  • As such, given that the trailing commission is by definition paid on a yearly basis, one needs to multiply the trailing commission by 3.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

(edited)

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Ian
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replied on Jul 03, 2023
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

Great question! Hagen has already answered, but make sure to read all sections of a case to better understand. Additionally, these are the types of “tricks” that are common in cases so the interviewer can check that you are thinking rationally about things (even if you have not “learned” that exact thing)

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Cristian gave the best answer

Cristian

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