This approach is much better than something like solving another puzzle in Hackerrank. It also working both ways, because by the quality of assignment you can see through what kind of company you are really applying to. I personally find most of the time such assignments to be a good thing and enjoyed doing them, but also had one case where company asked me to do self-contained module that solves one of the problems they had and on the follow up interview they asked me to refactor it so that it could be embedded into their product. Which I did and they liked it and then decided not to proceed. I could sense they didn't actually need a new developer, but needed someone to extend their product for free.