NEW HERE? LEARN MORE
closeclose
Last visit was: 24 Apr 2024, 00:53 It is currently 24 Apr 2024, 00:53
Decision Tracker
My Rewards
New posts
New comers' posts

Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel

If money is invested at r percent interest, compounded annua

SORT BY:
Date
Kudos
Tags:
Find Similar Topics 
Show Tags
Hide Tags
User avatar
feellikequitting
Manager
Manager
Joined: 17 Jul 2010
Posts: 102
Own Kudos [?]: 164 [10]
Given Kudos: 43
Send PM
If money is invested at r percent interest, compounded annua [#permalink] New post   27 Jan 2013, 23:46
3
Kudos
7
Bookmarks
00:00
A
B
C
D
E

Difficulty:

95% (hard)

Question Stats:

39% (02:07) correct 61% (02:29) wrong based on 180 sessions
Hide Show timer Statistics
If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 50/r years. If Luke's parents invested $12,500 in a long term bond that pays 12 percent interest compounded annually, what will be the approximate total amount of the investment 12 years later, when Luke is ready for college?

A) 62,000
B) 85,500
C) 95,500
D) 100,500
E) 100,000
ShowHide Answer
Official Answer
E
User avatar
MacFauz
VP
VP
Joined: 02 Jul 2012
Posts: 1011
Own Kudos [?]: 3117 [0]
Given Kudos: 116
Location: India
Concentration: Strategy
Schools: Ross '16 (D) McCombs '16 (D) Kenan-Flagler '16 (WA) Olin '16 (M$) Tepper '16 (D)
GMAT 1: 740 Q49 V42
GPA: 3.8
WE:Engineering (Energy and Utilities)
Send PM
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   28 Jan 2013, 00:05
Can you provide the source of the question?.. I believe the answers are clustered together too closely to make viable options for an approximation question.
User avatar
L
Bunuel
Math Expert
Joined: 02 Sep 2009
Posts: 92892
Own Kudos [?]: 618664 [2]
Given Kudos: 81564
Send PM
CAT Tests Forum Quiz Mode
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   28 Jan 2013, 00:19
2
Kudos
Expert Reply
laythesmack23 wrote:
If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 50/r years. If Luke's parents invested $12,500 in a long term bond that pays 12 percent interest compounded annually, what will be the approximate total amount of the investment 12 years later, when Luke is ready for college?

A) 62,000
B) 85,500
C) 95,500
D) 100,500
E) 100,000

Don't be rude people, leave your kudo's here!


Proper version of this question is from from Official Guide:
If money is invested at r percent interest, compounded annually, the amount of investment will double in approximately 70/r years. If Pat's parents invested $ 5000 in a long term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of 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.

Discussed here: if-money-is-invested-at-r-percent-interest-compounded-annual-104225.html
User avatar
feellikequitting
Manager
Manager
Joined: 17 Jul 2010
Posts: 102
Own Kudos [?]: 164 [0]
Given Kudos: 43
Send PM
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   31 Jan 2013, 16:06
MacFauz wrote:
Can you provide the source of the question?.. I believe the answers are clustered together too closely to make viable options for an approximation question.


OG guide, please see original question that Banuel listed above.

I simply changed the #'s around, and changed the answer's to fit my revised question.

Laythesmack23
User avatar
MacFauz
VP
VP
Joined: 02 Jul 2012
Posts: 1011
Own Kudos [?]: 3117 [0]
Given Kudos: 116
Location: India
Concentration: Strategy
Schools: Ross '16 (D) McCombs '16 (D) Kenan-Flagler '16 (WA) Olin '16 (M$) Tepper '16 (D)
GMAT 1: 740 Q49 V42
GPA: 3.8
WE:Engineering (Energy and Utilities)
Send PM
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   31 Jan 2013, 23:22
laythesmack23 wrote:
MacFauz wrote:
Can you provide the source of the question?.. I believe the answers are clustered together too closely to make viable options for an approximation question.


OG guide, please see original question that Banuel listed above.

I simply changed the #'s around, and changed the answer's to fit my revised question.

Laythesmack23


Understood.. Although the 70/N part should not be changed because then, the interest rate would not be in line with a compound interest... Otherwise the question is fine... I believe the answer choices should be more widely spread apart.. Using the formula for compound interest "C" will actually be closest value to the actual answer...
User avatar
gauravkaushik8591
Manager
Manager
Joined: 24 Oct 2013
Posts: 126
Own Kudos [?]: 141 [0]
Given Kudos: 83
Location: Canada
Schools: LBS '18
GMAT 1: 720 Q49 V38
WE:Design (Transportation)
Send PM
GMAT ToolKit User
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   30 Mar 2014, 19:29
Answer equals E in 48 years. I thought by 50th year it would reach 100,500. Options should have been separated more widely for clarity.
User avatar
L
KarishmaB
Tutor
Joined: 16 Oct 2010
Posts: 14815
Own Kudos [?]: 64888 [0]
Given Kudos: 426
Location: Pune, India
Send PM
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   30 Mar 2014, 20:17
Expert Reply
gauravkaushik8591 wrote:
Answer equals E in 48 years. I thought by 50th year it would reach 100,500. Options should have been separated more widely for clarity.


This question is not correct since with compound interest, amount doubles every 70/n years (good to remember this - comes in handy sometimes). This cannot be changed to 50/n. The actual OG question has 70/n - they give it because they don't expect you to know it. There are no problems with the OG question given by Bunuel in the post above. Try that out instead.
User avatar
gauravkaushik8591
Manager
Manager
Joined: 24 Oct 2013
Posts: 126
Own Kudos [?]: 141 [0]
Given Kudos: 83
Location: Canada
Schools: LBS '18
GMAT 1: 720 Q49 V38
WE:Design (Transportation)
Send PM
GMAT ToolKit User
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   30 Mar 2014, 20:49
VeritasPrepKarishma wrote:
gauravkaushik8591 wrote:
Answer equals E in 48 years. I thought by 50th year it would reach 100,500. Options should have been separated more widely for clarity.


This question is not correct since with compound interest, amount doubles every 70/n years (good to remember this - comes in handy sometimes). This cannot be changed to 50/n. The actual OG question has 70/n - they give it because they don't expect you to know it. There are no problems with the OG question given by Bunuel in the post above. Try that out instead.


Karishma,

I totally understand what you said. Thanks for clarification. But since the question bent the formula to 50/n, I started treating it like an exponential growth and decay question.
User avatar
L
KarishmaB
Tutor
Joined: 16 Oct 2010
Posts: 14815
Own Kudos [?]: 64888 [1]
Given Kudos: 426
Location: Pune, India
Send PM
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   30 Mar 2014, 22:54
1
Kudos
Expert Reply
gauravkaushik8591 wrote:
VeritasPrepKarishma wrote:
gauravkaushik8591 wrote:
Answer equals E in 48 years. I thought by 50th year it would reach 100,500. Options should have been separated more widely for clarity.


This question is not correct since with compound interest, amount doubles every 70/n years (good to remember this - comes in handy sometimes). This cannot be changed to 50/n. The actual OG question has 70/n - they give it because they don't expect you to know it. There are no problems with the OG question given by Bunuel in the post above. Try that out instead.


Karishma,

I totally understand what you said. Thanks for clarification. But since the question bent the formula to 50/n, I started treating it like an exponential growth and decay question.


Yes, but the question still mentions that the interest is 'compounded'. Let that raise a red flag in future!
User avatar
gauravkaushik8591
Manager
Manager
Joined: 24 Oct 2013
Posts: 126
Own Kudos [?]: 141 [1]
Given Kudos: 83
Location: Canada
Schools: LBS '18
GMAT 1: 720 Q49 V38
WE:Design (Transportation)
Send PM
GMAT ToolKit User
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   30 Mar 2014, 22:57
1
Kudos
VeritasPrepKarishma wrote:

Yes, but the question still mentions that the interest is 'compounded'. Let that raise a red flag in future!


Will keep that in mind and add it to my error log. Thank you so much. : )
avatar
B
converge
Manager
Manager
Joined: 19 Jun 2014
Status:Eagles Become Vultures
Posts: 50
Own Kudos [?]: 58 [0]
Given Kudos: 13
Concentration: Finance, Strategy
Schools: LBS '18 (M)
GMAT 1: 710 Q48 V39
GPA: 4
WE:Corporate Finance (Energy and Utilities)
Send PM
Reviews Badge
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   07 Jan 2015, 14:03
Dividing 70/8 yields 8.75 years. So, in 8.75 years 5,000 would become 10,000. In another 8.75 years the amount would become 20,000.

Since by now 17.5 is almost equal to 18, the answer is A: 20,000.
avatar
L
TheUltimateWinner
CEO
CEO
Joined: 23 Feb 2015
Posts: 2519
Own Kudos [?]: 2096 [0]
Given Kudos: 1976
Concentration: Finance, Technology
Schools: Harvard '24 Judge '23 LBS '24 McCombs '24 Mendoza Tepper '24 Ross '24 Cox Marshall '24 Fisher Kelley '24 Jones McDonough '24 Owen '24 Terry BU Simon '24 Katz GWU Mason Babson Gabelli Foster '24 Goizueta '24 Scheller Stern '23 CBS '23 Booth '23 Haas '25 Wharton '25 Stanford '26 Johnson'23 Fuqua '23 Kellogg '23 Kenan-Flagler'23 INSEAD Aug 22 intake Olin '23 Said '23 Sloan '23 Carey Arizona "22 Yale '23 UC Davis Madison '23 Anderson '23 Carroll Carlson '23 Darden '23
Send PM
GMAT ToolKit User CAT Tests
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   15 Apr 2020, 18:30
VeritasKarishma wrote:
gauravkaushik8591 wrote:
Answer equals E in 48 years. I thought by 50th year it would reach 100,500. Options should have been separated more widely for clarity.


This question is not correct since with compound interest, amount doubles every 70/n years (good to remember this - comes in handy sometimes). This cannot be changed to 50/n. The actual OG question has 70/n - they give it because they don't expect you to know it. There are no problems with the OG question given by Bunuel in the post above. Try that out instead.

VeritasKarishma
Are you saying that the creative question (talking about the original post) is NOT correct?

Also, it shows that this question is 95% difficulty level question, but the original question (OG question) shows just 35% difficulty level. I did not see any point this question to be 95% difficulty level.
Thanks__
User avatar
bumpbot
Non-Human User
Joined: 09 Sep 2013
Posts: 32637
Own Kudos [?]: 821 [0]
Given Kudos: 0
Send PM
Re: If money is invested at r percent interest, compounded annua [#permalink] New post   06 Sep 2021, 01:47
Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
GMAT Club Bot
gmatclubot
Re: If money is invested at r percent interest, compounded annua [#permalink]
06 Sep 2021, 01:47
Moderators:
Bunuel
Math Expert
92888 posts
yashikaaggarwal
Senior Moderator - Masters Forum
3137 posts

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne
Main navigation
GMAT Resources
Partners
MBA Resources
www.gmac.com|www.mba.com | | GMAT Club Rules | Terms and Conditions