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# GMAT Prep - Investment Involving Interest Rates

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Intern
Joined: 01 May 2009
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GMAT Prep - Investment Involving Interest Rates [#permalink]

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05 Jul 2009, 07:17
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Dear Ppl,

I came across this question when I did my GMAT Test Prep Paper 1.

I looked at it a few times and still can't figure out a way to solve it. It is not that easy to simplify the first and latter statements as the k is to the power of 2 (former statement) and 3 (latter statement)

Would be very grateful for some detailed explanations & workings

An investment of d dollars at k percent simple annual interest yields \$600 interest over a 2 year period. In terms of d, what dollar amount invested at the same rate will yield \$2,400 interest over a 3 year period?

A. 2d/3

B. 3d/4

C. 4d/3

D. 3d/2

E. 8d/3

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Current Student
Joined: 13 Jan 2009
Posts: 364

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Location: India
Re: GMAT Prep - Investment Involving Interest Rates [#permalink]

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05 Jul 2009, 07:35
i=Prt/100
P-Princ.
r-rate
t-time
i -int.

600=dk2/100

k=30000/d--(a)

2400=pk3/100

using a

2400=p*30000/d*3/100

on solving
p=8d/3...E

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Intern
Joined: 30 May 2009
Posts: 8

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Re: GMAT Prep - Investment Involving Interest Rates [#permalink]

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08 Jul 2009, 03:21
1
KUDOS
Simple interest(I) is linear , that is you get the same I for each year

" An investment of d dollars at k percent simple annual interest yields \$600 interest over a 2 year period. In terms of d, what dollar amount invested at the same rate will yield \$2,400 interest over a 3 year period? "

******** the rate doesn't change ***********
so we need to earn \$ 800 per year , but we earn \$300 by investing \$d @ k% so the amount we should invest is A

Then A = 800*d/300 = 8d/3

Or one can use very simple logic , we need to earn more than twice what we are earning now so go through the answers

A. 2d/3 --------------> out lees than 1

B. 3d/4 --------------> out less than 1

C. 4d/3---------------> out less than 2

D. 3d/2---------------> out less than 2

E. 8d/3 ----------------> this is the only reaming answer so this must be the one !!!!!!!!

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Manager
Joined: 06 May 2009
Posts: 76

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Re: GMAT Prep - Investment Involving Interest Rates [#permalink]

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09 Jul 2009, 02:30
Good one Ghacker

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Re: GMAT Prep - Investment Involving Interest Rates   [#permalink] 09 Jul 2009, 02:30
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