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If money is invested at r percent interest, compounded annua

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If money is invested at r percent interest, compounded annua [#permalink] New post 17 Dec 2012, 05:46
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If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 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 approximate total amount of the investment 18 years later, when Pat is ready for college?

(A) $20000
(B) $15000
(C) $12000
(D) $10000
(E) $9000
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Re: If money is invested at r percent interest, compounded annua [#permalink] New post 17 Dec 2012, 05:48
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Walkabout wrote:
If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 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 approximate total amount of the investment 18 years later, when Pat is ready for college?

(A) $20000
(B) $15000
(C) $12000
(D) $10000
(E) $9000


Since investment doubles in 70/r years, then for r=8 it'll double in 70/8=~9 years (we are not asked about the exact amount so such an approximation will do). Thus in 18 years investment will double twice and become ($5,000*2)*2=$20,000 (after 9 years investment will become $5,000*2=$10,000 and in another 9 years it'll become $10,000*2=$20,000).

Answer: A.
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Re: If money is invested at r percent interest, compounded annua [#permalink] New post 25 Jun 2014, 11:12
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Re: If money is invested at r percent interest, compounded annua [#permalink] New post 25 Jun 2014, 22:37
It's very important to pay attention to the wordings as first I thought that the compound interest formula needs to be applied.

Though I read the question again and got it correct :)

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Re: If money is invested at r percent interest, compounded annua [#permalink] New post 24 Aug 2014, 14:25
I think without the 1st sentence, we still can guess the answer easily.

$5,000 at 8%/year = $400/year --> 10-years interest will be $4,000, 20 years will be $8,000
Since the interest compounded annually in 18 years (very long period), the total value would be >$18,000 --> eliminate B,C,D,E
Re: If money is invested at r percent interest, compounded annua   [#permalink] 24 Aug 2014, 14:25
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