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An investment compounds annually at an interest rate of 34.1% What is [#permalink]

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14 Feb 2011, 20:25

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39% (01:26) wrong based on 147 sessions

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An investment compounds annually at an interest rate of 34.1% What is the smallest investment period by which time the investment will more than triple in value?

Re: An investment compounds annually at an interest rate of 34.1% What is [#permalink]

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15 Feb 2011, 08:24

Please correct me if I am wrong but it seems you need to workout the multiplication of 1.341 at least 3 times very quickly which seems rather daunting given the tight time constraints of the GMAT..

Re: An investment compounds annually at an interest rate of 34.1% What is [#permalink]

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15 Feb 2011, 10:29

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drifting wrote:

Please correct me if I am wrong but it seems you need to workout the multiplication of 1.341 at least 3 times very quickly which seems rather daunting given the tight time constraints of the GMAT..

Is there a faster way of doing this?

I agree; I divided the principal by 3 by considering approx 33.33% and rounded the value to greater nearest integer;

Re: An investment compounds annually at an interest rate of 34.1% What is [#permalink]

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16 Feb 2011, 00:07

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subhashghosh wrote:

Please explain this bit :

"I divided the principal", i.e, how does division of principal yield interest ?

We can quickly get the percentage if we divide the number for which the percentage is found: such as, 20% of 40 = 40/5 = 8 10% of 80 = 80/10 = 8 50% of 35 = 35/2 = 17.5 33.33% of 100 = 100/3 = 33 approx

Since 34.1% is close to 33.33%; we can divide the number(or principal by 3 and get the interest); Investment: $100

1st year: 34.1% interest is gotten back on 100: 100/3 = 33.33 approx $34: New principal becomes: Principal+Interest: 100+34=134

2nd year: 34.1% interest on 134; 134/3 = 45: Total: 134+45 = 179(new principal) 3rd year: 179/3 = 60: Total: 179+60 = 239 4th year: 239/3 = 80: Total: 239+80 = 319 > 3(100); end of 4 years, the return was already more than triple.
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Re: An investment compounds annually at an interest rate of 34.1% What is [#permalink]

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17 Feb 2011, 09:55

I liked this approach. This question is not difficult, but with this approach it can be done more quickly as well.

fluke wrote:

drifting wrote:

Please correct me if I am wrong but it seems you need to workout the multiplication of 1.341 at least 3 times very quickly which seems rather daunting given the tight time constraints of the GMAT..

Is there a faster way of doing this?

I agree; I divided the principal by 3 by considering approx 33.33% and rounded the value to greater nearest integer;

Re: An investment compounds annually at an interest rate of 34.1% What is [#permalink]

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19 Sep 2015, 21:59

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