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# If money is invested at r percent interest, compounded

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Manager
Joined: 10 Dec 2007
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If money is invested at r percent interest, compounded [#permalink]  20 Jan 2008, 09:37
If money is invested at r percent interest, compounded annually, the amount of the investment will double in approx.70/r years.If pat's parents invested $5'000 in a long term bond that pays 8 percent interest, compounded annually, what will be the approx total amount of the investment 18 years later, when Pat is ready for college? A.$20,000
B. $15,000 C.$12,000
D. $10,000 E.$9,000

-thanx
Director
Joined: 01 Jan 2008
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Re: money [#permalink]  20 Jan 2008, 10:51
4 = 8%, double in 70/8 = 35/4 = 8.75, quadriple in 17.5 years. 5*4 = 20, A is the answer.
Manager
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Re: money [#permalink]  20 Jan 2008, 10:54

Expln : 2P = P ( 1+ r/100)^70/r As per coumpond interest on value P after 70/r years

2= ( 1+ r/100 ) ^ 70/r

Now for 18 years problem final amount = 5000(1+8/100)^18
Put r=8 in above equation and (1+8/100)^9 appx equal to 2
so final amount is 5000 x 2 x 2 =20000
Intern
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Re: money [#permalink]  21 Jan 2008, 10:02
I say A

if 70/8 means it will double app every 9 years

then it will be 10000 at year 9
and 2 of 10000 will be 20000 at year 18
Re: money   [#permalink] 21 Jan 2008, 10:02
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