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

It is currently 22 Jul 2018, 09:44

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

If $1 were invested at 8 percent interest compounded annually, the

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

Hide Tags

Manager
Manager
avatar
Joined: 04 Feb 2011
Posts: 59
Location: US
If $1 were invested at 8 percent interest compounded annually, the  [#permalink]

Show Tags

New post Updated on: 25 May 2017, 13:28
2
00:00
A
B
C
D
E

Difficulty:

  5% (low)

Question Stats:

82% (00:26) correct 18% (00:42) wrong based on 132 sessions

HideShow timer Statistics

If $1 were invested at 8 percent interest compounded annually, the total value of investment, in dollars at the end of 6 years would be

A. \((1.8)^6\)

B. \((1.08)^6\)

C. \(6(1.08)\)

D. \(1 + (0.08)^6\)

E. \(1 + 6(0.08)\)

Originally posted by Lolaergasheva on 08 Feb 2011, 04:48.
Last edited by Bunuel on 25 May 2017, 13:28, edited 1 time in total.
Renamed the topic and edited the question.
Math Forum Moderator
avatar
Joined: 20 Dec 2010
Posts: 1899
Re: If $1 were invested at 8 percent interest compounded annually, the  [#permalink]

Show Tags

New post 08 Feb 2011, 05:18
1
Q: What is the future value of $1 after 6 years; if it incurs compound interest every year once.

Formula:
\(FV = PV(1+\frac{r}{n})^{nt}\)

where,
FV= Future Value
PV= Present Value = $1
r= interest rate = 8% = 0.08
n=frequency of interest application to the value per year = 1(if compunded annually); it means that 8% interest is applied only once a year.
t=time (in years)=6

\(FV = PV(1+\frac{r}{n})^{nt}\)
\(FV = 1(1+\frac{0.08}{1})^{1*6}\)
\(FV = 1(1+0.08)^6\)
\(FV = (1.08)^6\)

Ans: "B"
_________________

~fluke

GMAT Club Premium Membership - big benefits and savings

1 KUDOS received
Director
Director
User avatar
D
Joined: 04 Dec 2015
Posts: 700
Location: India
Concentration: Technology, Strategy
Schools: ISB '19, IIMA , IIMB, XLRI
WE: Information Technology (Consulting)
GMAT ToolKit User
Re: If $1 were invested at 8 percent interest compounded annually, the  [#permalink]

Show Tags

New post 17 May 2017, 06:04
1
If 1$ were invested at 8% interest compounded annually, the total value of the investment at the end of 6 years would be:

Amount = P \((1+\frac{r}{100})^n\)

P = Principal, r = rate of interest, n = number of years.
P = $1, r = 8% , n = 6 years

Amount = 1\((1+\frac{8}{100})^6\) = 1\((\frac{108}{100})^6\) = 1\((1.08)^6\) = \((1.08)^6\)
Answer B...

_________________
Kindly press "+1 Kudos" to appreciate :)
Expert Post
Target Test Prep Representative
User avatar
G
Status: Founder & CEO
Affiliations: Target Test Prep
Joined: 14 Oct 2015
Posts: 2973
Location: United States (CA)
Re: If $1 were invested at 8 percent interest compounded annually, the  [#permalink]

Show Tags

New post 19 May 2017, 06:24
Lolaergasheva wrote:
If 1$ were invested at 8% interest compounded annually, the total value of the investment at the end of 6 years would be:

A. (1.8)^6
B. (1.08)^6
C. 6(1.08)
D. 1 + (0.08)^6
E. 1 + 6(0.08)


Using the compound interest formula, we have:

future value = present value(1 + rate/n)^nt

(in which n = number of compounding periods in a year and t = total number of years)

future value = 1(1 + 0.08/1)^(1)(6)

future value = (1.08)^6

Answer: B
_________________

Scott Woodbury-Stewart
Founder and CEO

GMAT Quant Self-Study Course
500+ lessons 3000+ practice problems 800+ HD solutions

Expert Post
Top Contributor
CEO
CEO
User avatar
P
Joined: 12 Sep 2015
Posts: 2635
Location: Canada
If $1 were invested at 8 percent interest compounded annually, the  [#permalink]

Show Tags

New post 12 Oct 2017, 15:55
Top Contributor
Lolaergasheva wrote:
If $1 were invested at 8 percent interest compounded annually, the total value of investment, in dollars at the end of 6 years would be

A. \((1.8)^6\)

B. \((1.08)^6\)

C. \(6(1.08)\)

D. \(1 + (0.08)^6\)

E. \(1 + 6(0.08)\)


You can use this formula to calculate compound interest:
Final balance = P( 1 + r/c)^nc where:
P = the principal (the initial investment)
r = the annual interest rate expressed as a decimal
c = the number of times the interest is compounded each year
n = the number of years the investment collects interest

For this question, P = $1, r = 0.08, c = 1, n = 6
So, the FINAL BALANCE = 1( 1 + 0.08/1)^[(6)(1)]
= (1.08)^6
Answer:

Cheers,
Brent
_________________

Brent Hanneson – Founder of gmatprepnow.com

Image

If $1 were invested at 8 percent interest compounded annually, the &nbs [#permalink] 12 Oct 2017, 15:55
Display posts from previous: Sort by

If $1 were invested at 8 percent interest compounded annually, the

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

Events & Promotions

PREV
NEXT


GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| GMAT Club Rules| Contact| Sitemap

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®.