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Updated on: 25 May 2017, 13:28
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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. Retired Moderator Joined: 20 Dec 2010 Posts: 1571 Re: If$1 were invested at 8 percent interest compounded annually, the  [#permalink]

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08 Feb 2011, 05:18
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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"
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Re: If $1 were invested at 8 percent interest compounded annually, the [#permalink] Show Tags 17 May 2017, 06:04 2 If 1$ 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 Target Test Prep Representative Status: Founder & CEO Affiliations: Target Test Prep Joined: 14 Oct 2015 Posts: 8117 Location: United States (CA) Re: If$1 were invested at 8 percent interest compounded annually, the  [#permalink]

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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 Scott@TargetTestPrep.com 122 Reviews 5-star rated online GMAT quant self study course See why Target Test Prep is the top rated GMAT quant course on GMAT Club. Read Our Reviews If you find one of my posts helpful, please take a moment to click on the "Kudos" button. GMAT Club Legend Joined: 12 Sep 2015 Posts: 4016 Location: Canada If$1 were invested at 8 percent interest compounded annually, the  [#permalink]

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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

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Brent
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Re: If $1 were invested at 8 percent interest compounded annually, the [#permalink] Show Tags 21 Oct 2018, 00:29 Hello from the GMAT Club BumpBot! Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos). Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email. _________________ Re: If$1 were invested at 8 percent interest compounded annually, the   [#permalink] 21 Oct 2018, 00:29
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