It is currently 17 Jan 2018, 06:59

### 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

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

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# A certain sum amount to $1400 in 2 yrs and$2000 in five years on cert

 new topic post reply Question banks Downloads My Bookmarks Reviews Important topics
Author Message
TAGS:

### Hide Tags

Manager
Joined: 06 Apr 2010
Posts: 139

Kudos [?]: 993 [0], given: 15

A certain sum amount to $1400 in 2 yrs and$2000 in five years on cert [#permalink]

### Show Tags

31 Oct 2010, 04:34
1
This post was
BOOKMARKED
00:00

Difficulty:

45% (medium)

Question Stats:

62% (01:38) correct 38% (02:41) wrong based on 42 sessions

A certain sum amount to $1400 in 2 yrs and$2000 in five years on certain fixed simple interest. In how many yrs would the amount be $1440 had it been put at the rate of interest compounded annually? 1. 4.5 2. 3.5 3. 3 4. 2 5. 1 [Reveal] Spoiler: OA Kudos [?]: 993 [0], given: 15 Veritas Prep GMAT Instructor Joined: 16 Oct 2010 Posts: 7863 Kudos [?]: 18461 [1], given: 237 Location: Pune, India Re: A certain sum amount to$1400 in 2 yrs and $2000 in five years on cert [#permalink] ### Show Tags 31 Oct 2010, 05:45 1 This post received KUDOS Expert's post 1 This post was BOOKMARKED The sum amounts to 1400 in 2 yrs and 2000 in 5 yrs. It increases by 600 in 3 yrs. Since simple interest remains the same every year, SI = 200. Then the original sum must have been 1400 - 400 = 1000 and rate of interest must have been 20%. If compounded annually, a sum of 1000 at 20% will become a little more than 1200 in 1 year, more than 1400 in 2 yrs and more than 1600 in 3 yrs... Answer must be 2 yrs. Note: Even these calculations are excess. At SI, if sum is 1400 in 2 years, same sum at same rate of interest will become something more than 1400 in 2 yrs and more than 1600 in 3 years. The only option that fits is 2 yrs. _________________ Karishma Veritas Prep | GMAT Instructor My Blog Get started with Veritas Prep GMAT On Demand for$199

Veritas Prep Reviews

Kudos [?]: 18461 [1], given: 237

Manager
Joined: 09 Jun 2010
Posts: 111

Kudos [?]: 154 [0], given: 1

Re: A certain sum amount to $1400 in 2 yrs and$2000 in five years on cert [#permalink]

### Show Tags

31 Oct 2010, 07:25
We can form equations as following:

Initial amount = P, Total amount after interest = T, Interest per year = I

T = P+I

Given T1 = P+2I = 1400 & T2 = P+ 5I = 2000

From this we get, P = 1000 & I = 200 $Now we know that simple interest is < Compound interest ( CI = SI only after 1st year if CI is compounded annually) consider simple interest - after 1st yer it is 200$ , after 2nd years it is 400$and after 3rd year it is 600$.

To get a 440 $compound interest the duration have to be > 1 year and < 3 years. Only option fitting : Option D. Kudos [?]: 154 [0], given: 1 VP Joined: 22 May 2016 Posts: 1244 Kudos [?]: 455 [1], given: 670 A certain sum amount to$1400 in 2 yrs and $2000 in five years on cert [#permalink] ### Show Tags 20 Nov 2017, 12:26 1 This post received KUDOS 1 This post was BOOKMARKED udaymathapati wrote: A certain sum amount to$1400 in 2 yrs and $2000 in five years on certain fixed simple interest. In how many yrs would the amount be$1440 had it been put at the rate of interest compounded annually?

1. 4.5
2. 3.5
3. 3
4. 2
5. 1

Simple interest, SI, per year
Years (5-2) = (2,000-1,400) = $600 SI in 3 years SI per year is$600/3 = $200 Original amount? Year 2 - 2(200): 1,400- 2(200) =$1,000

Simple interest rate:$$\frac{200}{1000} *100$$ = 20%

How many years for $1,000 to be$1,440 if interest rate were compounded annually?

First year only: simple interest = interest compounded annually

End Year 1: (1,000 + 200) = $1,200 End Year 2: (1,200 * 1.2) =$1,440
OR
1,200+(.2)(1,200)=(1,200+240)= $1,440 Answer D Alternatively, $$A = P(1 + r)^{t}$$ P = principal, r = decimal interest rate, t = time The number "$1,440," and compound interest rate "1.2" are big hints.

$$(1.2)^2 = 1.44$$; principal = $1,000 Mentally I just did $$1,000(1.2)^2 = 1,000(1.44) = 1,440$$ The long way: $$1,440 = 1,000(1 + .20)^{x}$$ $$1,440 = 1,000(1.20)^{x}$$ $$\frac{1,440}{1,000} = (1.2)^{x}$$ $$1.44 = 1.2^{x}$$ $$(1.2)^1(1.2)^1 = 1.2^{x}$$ $$1 + 1 = x$$ $$x = 2$$ Answer D _________________ (formerly genxer123) At the still point, there the dance is. -- T.S. Eliot Kudos [?]: 455 [1], given: 670 A certain sum amount to$1400 in 2 yrs and $2000 in five years on cert [#permalink] 20 Nov 2017, 12:26 Display posts from previous: Sort by # A certain sum amount to$1400 in 2 yrs and \$2000 in five years on cert

 new topic post reply Question banks Downloads My Bookmarks Reviews Important topics

 Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.