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# 2000 Euros invested in year 2001 becomes 64000 Euros in the

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Senior Manager
Joined: 30 Aug 2003
Posts: 330
Location: BACARDIVILLE
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2000 Euros invested in year 2001 becomes 64000 Euros in the [#permalink]  12 Jan 2004, 13:06
2000 Euros invested in year 2001 becomes 64000 Euros in the year 2021. If the amount earned compoun interest during this period, interest being compounded annually, what was the approximate rate of interest in which it was invested?

a. 11%
b. 16%
c. 18%
d. 20%
e. 22%
_________________

Pls include reasoning along with all answer posts.
****GMAT Loco****
Este examen me conduce jodiendo loco

GMAT Club Legend
Joined: 15 Dec 2003
Posts: 4309
Followers: 29

Kudos [?]: 234 [0], given: 0

Definitely know the answer from a financial calculator but it is not clear to me how to get the approximation without it...
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Best Regards,

Paul

Senior Manager
Joined: 22 May 2003
Posts: 334
Location: Uruguay
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Kudos [?]: 40 [0], given: 0

Answer is C, although I reached a point in which I just had to use the calculator. Maybe someone can pick it up from there

2000*(1+r)^21=64000

(1+r)^21=32=2^5

[(1+r)^21]^(1/5)=2

approx. (1+r)^4=2

since 2^(1/2)=1.4 approx. then (1+r)(1+r)=1.4

I had to use the calc here...
Senior Manager
Joined: 30 Aug 2003
Posts: 330
Location: BACARDIVILLE
Followers: 1

Kudos [?]: 1 [0], given: 0

2000 Euros invested in year 2001 becomes 64000 Euros in the year 2021. If the amount earned compoun interest during this period, interest being compounded annually, what was the approximate rate of interest in which it was invested?

- Period of investment is 20 years.
- From E2000 to E64000 we can see that the investment has appreciated 32 times.
- If n is the years it takes to double, we know that the amount has appreciated 32 times, therefore it must have doubled 5 times. So, 5n
if 5n=20 , n = 4years.

Using either the rule of 72 or 69

72/4 = app 18%
_________________

Pls include reasoning along with all answer posts.
****GMAT Loco****
Este examen me conduce jodiendo loco

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