IR question 2 from the OG online questions

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Hi Everyone

I am confused as to how this question was tackled .. why are they dividing the Block rate by the lowest rate in host hotel?

What I did rather was multiplied the Block rate * 0.25.. which would total their reimbursement.. and compared that to the lowest rate in host hotel.

If lowest rate was higher than reimbursement then the answer would be no.

Help!

Duaa
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by Tommy Wallach » Wed Jan 16, 2013 6:29 pm
Am I mistaken in thinking we need to know what the ROB strategy is in order to answer this question?

-t
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by Tommy Wallach » Wed Jan 16, 2013 6:34 pm
Hey There,

I checked the other question you posted, which clears up what they're talking about. I think you're misunderstanding the process they used here. Instead of calculating the 25% right away, they took a look at what the difference was between the two prices. If the two are close enough together, then the 25% reimbursement is clearly going to be enough to cover the difference. This saves time, because you don't need to actually calculate the 25%.

For the final one, because the ratio is .64, we know immediately that a 25% reimbursement will NOT cover the difference (they would be exactly the same at .75).

Does that make more sense?

-t
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by tanviet » Thu Feb 07, 2013 11:45 pm
I can not see full screen shot. pls, post it again. Thank you