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Lucy invested $10,000 in a new mutual fund account exactly

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Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 03 Sep 2012, 04:47
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Lucy invested $10,000 in a new mutual fund account exactly three years ago. The value of the account increased by 10 percent during the first year, increased by 5 percent during the second year, and decreased by 10 percent during the third year. What is the value of the account today?

(A) $10,350
(B) $10,395
(C) $10,500
(D) $11,500
(E) $12,705

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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 03 Sep 2012, 04:47
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SOLUTION

Lucy invested $10,000 in a new mutual fund account exactly three years ago. The value of the account increased by 10 percent during the first year, increased by 5 percent during the second year, and decreased by 10 percent during the third year. What is the value of the account today?

(A) $10,350
(B) $10,395
(C) $10,500
(D) $11,500
(E) $12,705

The value of the account today would be 10,000*1.1*1.05*0.9. Now, the question is how to calculate this efficiently.

10,000*1.1*1.05*0.9=10,000*\frac{11}{10}*\frac{105}{100}*\frac{9}{10}=10,000*\frac{11*105*9}{10,000} --> 10,000 will cancel and we'll get: 11*105*9=(9*11)*105=99*105=(100-1)*105=10,500-105=10,395.

Answer: B.
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 03 Sep 2012, 05:07
Value after 1 year: 10,000 * 1.1 = 11,000
Value after 2 years: 11,000 * 1.05 = 11,550
Value today: 11,550 * 0.9 = 10,395

Answer B is correct.

The first equation is easy. In the second, first calculate 10% (1,100) and divide that by 2 (550). Add that to 11,000.
In the final equation, calculate 10% again (1,155) and subtract it from 11,550.
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 03 Sep 2012, 05:51
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Bunuel wrote:

Lucy invested $10,000 in a new mutual fund account exactly three years ago. The value of the account increased by 10 percent during the first year, increased by 5 percent during the second year, and decreased by 10 percent during the third year. What is the value of the account today?

(A) $10,350
(B) $10,395
(C) $10,500
(D) $11,500
(E) $12,705



This is a question of successive % change. This question ultimately reduces to a multiplication problem.
Final value after successive % change on $10,000 = $10,000 X 1.1 X 1.05 X .9
1.1 X 1.05 X .9 = 1.0395
Answer is B)
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 03 Sep 2012, 06:45
I also followed the same approach and got the answer as B.
But I am wondering if there is any better method of calculating in any problem with successive year interest rates given.
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 07 Sep 2012, 02:06
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SOLUTION

Lucy invested $10,000 in a new mutual fund account exactly three years ago. The value of the account increased by 10 percent during the first year, increased by 5 percent during the second year, and decreased by 10 percent during the third year. What is the value of the account today?

(A) $10,350
(B) $10,395
(C) $10,500
(D) $11,500
(E) $12,705

The value of the account today would be 10,000*1.1*1.05*0.9. Now, the question is how to calculate this efficiently.

10,000*1.1*1.05*0.9=10,000*\frac{11}{10}*\frac{105}{100}*\frac{9}{10}=10,000*\frac{11*105*9}{10,000} --> 10,000 will cancel and we'll get: 11*105*9=(9*11)*105=99*105=(100-1)*105=10,500-105=10,395.

Answer: B.

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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 07 Sep 2012, 20:56
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10000 + 1000 = 11000
11000 + 550 = 11550
11550 * 0.9 = 10395
(B)
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 19 Oct 2012, 01:06
Stupid lucy! If she sees that there is a crisis in the world and her accounts diminishes every year, why hasn't she redraw her money after the second year?!?... I multiplied the last year with 1.1 instead of 0.9 and i got the D answear... This is lucy's fault! :D
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 15 Dec 2012, 11:14
Bunuel wrote:
SOLUTION

Lucy invested $10,000 in a new mutual fund account exactly three years ago. The value of the account increased by 10 percent during the first year, increased by 5 percent during the second year, and decreased by 10 percent during the third year. What is the value of the account today?

(A) $10,350
(B) $10,395
(C) $10,500
(D) $11,500
(E) $12,705

The value of the account today would be 10,000*1.1*1.05*0.9. Now, the question is how to calculate this efficiently.

10,000*1.1*1.05*0.9=10,000*\frac{11}{10}*\frac{105}{100}*\frac{9}{10}=10,000*\frac{11*105*9}{10,000} --> 10,000 will cancel and we'll get: 11*105*9=(9*11)*105=99*105=(100-1)*105=10,500-105=10,395.

Answer: B.

Thank you for the answer Bunuel, but i was just wondering. When you chose the denominators for the different fractions, was your goal to get 10 000 in the denominator so we could cancel Lucy's initial investment? Smart move by the way ;)
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 16 Dec 2012, 03:07
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the amount at the end of first year will become the principle for 2nd year, applying this trick and calculating we get the amount at the end of third year to be 10395. So the answer is (B).
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 02 May 2013, 10:12
.10x10,000= $1,000 end of y1 = 11,000
.05x11,000= $550.00 end of y2 = 11,550
.10x11,550= 1,150 -1,155
(subtract y2 with the loss of y3) end of y3= 10,395
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 08 Jun 2014, 04:26
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 06 Aug 2014, 10:49
We can use successive percentage formula : a+b + ab/100

so in the first two years it will increase 10 + 5 + 10*5/100 = 15.5

and in the second and third year it will be : 15.5 - 10 - 15.5*10/100 = 3.95

so finally the investment will increase by 3.95 %
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 06 Aug 2014, 21:37
Percent increase over time: 1.1 * 1.05 * 0.9 = 1.0395

1.0395 * 10,000 $ = 10,395 $

B
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Re: Lucy invested $10,000 in a new mutual fund account exactly [#permalink] New post 10 Sep 2014, 02:43
Bunuel wrote:
Lucy invested $10,000 in a new mutual fund account exactly three years ago. The value of the account increased by 10 percent during the first year, increased by 5 percent during the second year, and decreased by 10 percent during the third year. What is the value of the account today?

(A) $10,350
(B) $10,395
(C) $10,500
(D) $11,500
(E) $12,705

Practice Questions
Question: 31
Page: 156
Difficulty: 600


10,000*1.1--> 10% increase in the first year.
11000*1.05 --> 5% increase in second year
10% decrease from 11550 --> 10395
Re: Lucy invested $10,000 in a new mutual fund account exactly   [#permalink] 10 Sep 2014, 02:43
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