GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 16 Oct 2019, 22:41

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.

Close

Request Expert Reply

Confirm Cancel

An investment compounds annually at an interest rate of 34.1% What is

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

Hide Tags

Find Similar Topics 
Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 58391
An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post 14 Oct 2019, 21:42
1
1
00:00
A
B
C
D
E

Difficulty:

  35% (medium)

Question Stats:

61% (01:48) correct 39% (01:40) wrong based on 39 sessions

HideShow timer Statistics

Director
Director
avatar
D
Joined: 20 Jul 2017
Posts: 907
Location: India
Concentration: Entrepreneurship, Marketing
WE: Education (Education)
Re: An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post 14 Oct 2019, 22:43
1
Let the initial amount = p
After 'n' years, Amount = p(1 + 34.1/100)^n = p(1.341)^n

When n = 2, Amount = 1.75p approx
When n = 4, Amount = 3.06p approx
--> n = 4

IMO Option B
Senior Manager
Senior Manager
avatar
G
Joined: 18 May 2019
Posts: 357
GMAT ToolKit User Premium Member CAT Tests
Re: An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post 14 Oct 2019, 23:03
1
For simplicity of calculation, I would approximate 34.1% to 34%.

After year 1, The total amount will be 1.34 times the invested amount
After year 2, the total amount will be 1.34*1.34 = 1.7956 approximately 1.80 times the invested amount
After year 3, the total amount will be 1.34*1.80 = 2.412, approximately 2.4 times the invested amount
After year 4, the total amount will be 1.34*2.4 = 3.216, and this is more than 3 times the invested amount.

Therefore the amount has to be invested for at least 4 years at the compound annual interest rate of 34.1% in order to just earn more than three times the invested amount.

The answer is therefore B.

PS. I would be looking forward to shorter alternatives, as this approach is not optimal in my view.
Manager
Manager
avatar
G
Joined: 01 Mar 2019
Posts: 155
Location: India
Concentration: Strategy, Social Entrepreneurship
Schools: Ross '22, ISB '20, NUS '20
GPA: 4
Reviews Badge CAT Tests
Re: An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post 14 Oct 2019, 23:09
1
Initial Investment be x
Total amount = x(1.34)^y
Where y is time of investment
Above value have to become 3x
= (1.34*1.34*1.34*1.34) = 3.22x

So y have to be 4

OA:B

Posted from my mobile device
_________________
Appreciate any KUDOS given :)
GMAT Club Legend
GMAT Club Legend
User avatar
D
Joined: 18 Aug 2017
Posts: 5009
Location: India
Concentration: Sustainability, Marketing
GPA: 4
WE: Marketing (Energy and Utilities)
GMAT ToolKit User Premium Member
An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post Updated on: 15 Oct 2019, 21:23
CI=p*(1+r/100)'t
so R=34.1%
P=1 target P =4
will happen
IMO B

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?

A. 3
B. 4
C. 6
D. 9
E. 12

Originally posted by Archit3110 on 15 Oct 2019, 00:57.
Last edited by Archit3110 on 15 Oct 2019, 21:23, edited 1 time in total.
Director
Director
avatar
P
Joined: 24 Nov 2016
Posts: 589
Location: United States
CAT Tests
Re: An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post 15 Oct 2019, 04:48
1
Quote:
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?

A. 3
B. 4
C. 6
D. 9
E. 12


34.1% is close to 33.3% = 1/3

\((1+1/3)^n≥3…(4/3)^n≥3\)
\(n=3…(4/3)^3=64/27<3\)
\(n=4…(4/3)^4=256/81=aprox.260/80=aprox.26/8>3\)

Answer (B)
Manager
Manager
User avatar
G
Joined: 10 Apr 2018
Posts: 223
Location: India
Concentration: Entrepreneurship, Strategy
GMAT 1: 680 Q48 V34
GPA: 3.3
Premium Member Reviews Badge CAT Tests
Re: An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post 15 Oct 2019, 06:26
1
Quote:
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?

A. 3
B. 4
C. 6
D. 9
E. 12


Let the principal amount be p and time period of investment be t.
So, 3p=p\((1+\frac{34.1}{100})^t\)
=> 3=\((\frac{134.1}{100})^t\)
=>3=\((1.341)^t\)
For t=3, \((1.341)^t\)=2.41 and for t=4, \((1.341)^t\)=3.23
Thus, smallest investment period is 4 years.

Therefore, the correct answer is option B.
Manager
Manager
avatar
G
Joined: 22 Feb 2018
Posts: 111
CAT Tests
Re: An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post 15 Oct 2019, 08:40
1
Imo. B

Initial investment = p, final amount (triple) = 3p, r = 34.1 % and n=?

3p = p (1+34.1/100)n
3 = (1.341)n, as p cancels out from the equation
Let's workout from answer choices to get the answer in quickest way,
Let's try, n=3, 1.3(41)*1.3 = 1.69, 1.69*1.3 = 1.6 * 1.3 = 2.xy, So, A is not the answer
Let's try, n=4, 1.34*1.34 = ~ 1.8, 1.8*1.8 = 3.xy, So, B can be answer.
Rest options are greater than 4, hence, it can satisfy the equation. But, we need smallest investment period to triple the investment. Hence, n = 4.

A. 3
B. 4
C. 6
D. 9
E. 12
Senior Manager
Senior Manager
avatar
G
Joined: 07 Mar 2019
Posts: 321
Location: India
GMAT 1: 580 Q43 V27
WE: Sales (Energy and Utilities)
CAT Tests
Re: An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post 15 Oct 2019, 11:11
1
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?

A. 3
B. 4
C. 6
D. 9
E. 12

Here Rule of 72 can be applied. The rule states that number '72' if divided by number of interest rate(34.1) would give a number of period in which the investment amount doubles. So to triple the investment amount we simply multiple the resultant number by 3/2. Hence

\(\frac{72}{34.1} * \frac{3}{2}\) = 3.16

Since our investment period is annual, the smallest investment period is 4.

Alternatively,

Let investment = 100
Rate r = 34.1%
Initial amount = 100
Amount after 1st year = 134.1
Amount after 2nd year = 179.8
Amount after 3rd year = 241.1
Amount after 4th year = 323.3 (more than triple)

Answer B.

P.S.: In finance rule of 72 is not accurate so other measures are taken to make it as accurate as possible
_________________
Ephemeral Epiphany..!

GMATPREP1 590(Q48,V23) March 6, 2019
GMATPREP2 610(Q44,V29) June 10, 2019
GMATPREPSoft1 680(Q48,V35) June 26, 2019
Manager
Manager
User avatar
G
Joined: 17 Jan 2019
Posts: 92
Premium Member Reviews Badge
Re: An investment compounds annually at an interest rate of 34.1% What is  [#permalink]

Show Tags

New post 15 Oct 2019, 19:17
1
2 times: 134.1*1.341 approximately 180
3 times: 180*1.341 is approximately 240
Therefore 4 times to get more than 300%

B
GMAT Club Bot
Re: An investment compounds annually at an interest rate of 34.1% What is   [#permalink] 15 Oct 2019, 19:17
Display posts from previous: Sort by

An investment compounds annually at an interest rate of 34.1% What is

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





Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne