Math Problem - Interview Question 400m after how many days?
My solution I am trying this without a calculator as stated so it’s possible that I’m off by an order of magnitude somewhere lol. This is not a job interview, this is me sitting on my sofa trying to give my brain a little exercise.
1. In an interview I would structure the problem using variables that can change. For example imagine that the entire budget was financed at 5% a year
2. In my head I can calculate that 25×16 = 400. So every 16 days you would make 400,000 and it would take 16,000 days to make 400 million
3. 1000 days is roughly 3 years. 3×16 is 48. 16,000 days is 48 years.
4. This is already starting to look like a pretty poor investment.
5. Staying with math that can be done in my head, 5% simple interest over 48 years is the same as 10% interest over 24 years. 10% interest is 40 million per year. $960 million in interest in 48 years.
6. That sounds awfully steep. It also means that $25,000 a day might not be enough profit to even pay the interest on any loan
7. $25,000 a day times seven days is $175,000 a week. Times 50 weeks is $8.725 million a year. so an annual return on investment of under 2.2%. In this example you would lose money every year if you had to make interest payments
8. Knowing nothing else except the numbers it seems like a poor investment. Unless there were tax incentives, real estate, intellectual property, or other potential revenue streams it seems like there are a lot of better ways to spend $$$
9. In an interview I would also ask for definitions of vague words like profit. Is this profit after tax, EBITA?
10. This was an interesting thought exercise. I hope you got the job! However, if it was the company that was only making $25,000 a day on a $400 million investment you might not want it.