IIFT 2019 Question Paper | Quants

CAT Questions

The best way to boost your IIFT prep is to practice the actual IIFT Question Papers. 2IIM offers you exactly that, in a student friendly format to take value from this. In the 2019 IIFT, quants were a mixed bag of questions of varying difficulty, with some routine questions and the others were very demanding. Some beautiful questions that laid emphasis on Learning ideas from basics and being able to comprehend more than remembering gazillion formulae and shortcuts.

Question 4: Joseph is in a dilemma. He has been offered a job which would pay him Rs 80,000 per month for first three years and Rs 1,20,000 per month for the next three years, and Rs 1,50,000 per month for the remaining four years. He has also been offered an MBA at a prestigious place and he is considering whether to accept the job or go for the MBA. The first year tuition fee for the MBA program is Rs 16,00,000 and the second year tuition fee for the MBA program is Rs 20,00,000. After MBA, he'll get a salary of Rs 2,00,000 per month for the first four years and then Rs 2,50,000 per month for the remaining four years. What will be the approximate percentage gain for Joseph in opting for the MBA instead of the job in the 10 years horizon considering no discounting of money?

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Video Explanation

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Explanatory Answer

Here we see the two scenarios, when Joseph goes for the MBA program and the other one where he does not and we compare the total amount spent / acquired by him in the duration of 10 years.
To save ourselves from working with a lot of zeros we will use k as a multiplier of 1000.
So, 80,000 could be written as 80k

In the scenarios when Joseph does not go for an MBA, the amount of money he will earn by the end of 10 years is:
(80k x 3 x 12) + (120k x 3 x 12) + (150k x 4 x 12) In the other scenario where he goes for an MBA, the amount of money he will earn and spend on the MBA by the end of 10 years is: -1600k -2000k + (200k x 4 x 12) + (250k x 4 x 12)

We have to find the ratio of the two amounts, and we see that a factor of 12 x k is common to both sides so we remove it.

240 +360 + 600 = 1200 and similarly -300 + 800 + 1000 = 1500
Which is 1200 : 1500 :: 4 : 5

5 is 25% higher than 4.
Therefore the answer is 25%.

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The question is "What will be the approximate percentage gain for Joseph?"

Hence, the answer is, "25%"