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An investment is made at 12.5% annual simple interest. The number of

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An investment is made at 12.5% annual simple interest. The number of  [#permalink]

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New post 31 Jul 2018, 00:27
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A
B
C
D
E

Difficulty:

  15% (low)

Question Stats:

73% (01:20) correct 27% (01:14) wrong based on 94 sessions

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Re: An investment is made at 12.5% annual simple interest. The number of  [#permalink]

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New post 31 Jul 2018, 00:44
Cumulative interest to be equal to original investment means the Investment to be double.
There is a shortcut formula for that.
Lets take n be the no of years to double the investment amount at an interest of r%
r = 72/n
by this formula we get n=5.76 so the 6 years will take to double the mount at 12.5% interest rate
The Correct answer is (C)
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Re: An investment is made at 12.5% annual simple interest. The number of  [#permalink]

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New post 31 Jul 2018, 03:20
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Bunuel wrote:
An investment is made at 12.5% annual simple interest. The number of years it will take for the cumulative value of the interest to equal the original investment is equalt to which of the following?


Simple Interest (I) = Principal (P) * Time (T) * Rate (R)
I = P * T * R

I = P (Given)

I = I * T * R
T * R = 1
T * 12.5/100 = 1
T = 100 / 12.5
T = 8 years

Hence, E.
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Re: An investment is made at 12.5% annual simple interest. The number of  [#permalink]

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New post 31 Jul 2018, 07:24
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Bunuel wrote:
An investment is made at 12.5% annual simple interest. The number of years it will take for the cumulative value of the interest to equal the original investment is equalt to which of the following?

(A) 4
(B) 5
(C) 6
(D) 7
(E) 8

12.50*8 = 100

Thus, Answer must be (E)
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Re: An investment is made at 12.5% annual simple interest. The number of  [#permalink]

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New post 04 Aug 2018, 06:37
Quote:
Cumulative interest to be equal to original investment means the Investment to be double.
There is a shortcut formula for that.
Lets take n be the no of years to double the investment amount at an interest of r%
r = 72/n
by this formula we get n=5.76 so the 6 years will take to double the mount at 12.5% interest rate
The Correct answer is (C)



Hiren06 your logic of 72 rule is applicable for compound interests, and mind you this works only for low rates may be until 25%.... The above question asks for simple interest and the approach should be pnr/100 = p; and solve for n.
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Re: An investment is made at 12.5% annual simple interest. The number of  [#permalink]

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New post 04 Aug 2018, 08:01
This is how i solved it:

S.I = P*R*T/100 = P*12.5*t/100
we have to find t when S.I = P
So t = S.I * 100/ 12.5*P = P*100/P*12.5 = 100/12.5 = 8

Answer = E
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Re: An investment is made at 12.5% annual simple interest. The number of  [#permalink]

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New post 04 Aug 2018, 20:56
sriramsundaram91 wrote:
Quote:
Cumulative interest to be equal to original investment means the Investment to be double.
There is a shortcut formula for that.
Lets take n be the no of years to double the investment amount at an interest of r%
r = 72/n
by this formula we get n=5.76 so the 6 years will take to double the mount at 12.5% interest rate
The Correct answer is (C)



Hiren06 your logic of 72 rule is applicable for compound interests, and mind you this works only for low rates may be until 25%.... The above question asks for simple interest and the approach should be pnr/100 = p; and solve for n.


Thank you sriramsundaram91. It is really helpful.
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Re: An investment is made at 12.5% annual simple interest. The number of  [#permalink]

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New post 10 Aug 2018, 19:10
Bunuel wrote:
An investment is made at 12.5% annual simple interest. The number of years it will take for the cumulative value of the interest to equal the original investment is equalt to which of the following?

(A) 4
(B) 5
(C) 6
(D) 7
(E) 8


We can assume the initial investment is $1000. Since the investment has a simple annual interest rate of 12.5%, in one year, the amount of interest accumulated is 1000 x 0.125 = $125. So it will take 1000/125 = 8 years to accumulate $1000 in interest.

Answer: E
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Re: An investment is made at 12.5% annual simple interest. The number of   [#permalink] 10 Aug 2018, 19:10
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