Find premium share for break-even
Company: Capital One
Role: Data Scientist
Category: Statistics & Math
Difficulty: easy
Interview Round: Technical Screen
The company considers splitting customers into Regular and Premium. Regular terms (unchanged): annual fee $50, average spending $500/month, 1% commission revenue, variable cost $5/year/customer. Premium terms: annual fee $65, average spending $625/month, 2% commission revenue, variable cost $15/year/customer, and an additional admin cost of $1.25/month/customer (applies to Premium only). Fixed maintenance remains $250,000,000/year. With total customers fixed at 2,000,000, how many must be Premium (and how many Regular) so that total annual profit equals $0 (company breaks even)? Set up the algebra clearly and solve for the Premium count; round to the nearest whole customer.
Quick Answer: This question evaluates a candidate's ability to construct and manipulate a linear financial model and perform break-even analysis using algebra, basic arithmetic, and unit cost/revenue calculations.
