Guys,
Please help me to understand the following part of this market sizing question:
- Why average financed value is: price of the car divided by 2? The video itself says that you pay more in the beginning to the bank, but pay less in the end. Also, it says nothing about 50% down payment.
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Market sizing question - average financed value
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Top answer
Pedro
edited on Feb 29, 2024
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Bain | EY-Parthenon | Private Equity | Market Estimates | Fit Interview
This is assuming you start with 100% financing.
Since it is the average you can simplify by being the average between the Initial Period (100% is financed) and the Final Period (0% is financed), after you repaid all capital.
(100% + 0%) / 2 = 50%
If you started with 50% down payment, then the average financed value would be (50% + 0%) / 2 = 25%
Of course, the framework seems to not be acknowledging that in general there will be a downpayment
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Ian
on Feb 21, 2024
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#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate
We need a lot more context here….
Cristian
on Feb 21, 2024
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#1 rated MBB & McKinsey Coach
Alnur, this looks intellectually interesting, but we don't have enough information to help you.
Can you provide the full context and what is specifically that you're struggling with?
Best,
Cristian
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