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If $2.00 were invested at 4% annual interest at the end of 8 years the

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New post 21 Dec 2017, 02:56
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If $2.00 were invested at 4% annual interest at the end of 8 years the total value of investment would be

A. $1.63
B. $2.08
C. $2.64
D. $2.74
E. $2.80
[Reveal] Spoiler: OA

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Re: If $2.00 were invested at 4% annual interest at the end of 8 years the [#permalink]

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New post 21 Dec 2017, 05:17
Bunuel wrote:
If $2.00 were invested at 4% annual interest at the end of 8 years the total value of investment would be

A. $1.63
B. $2.08
C. $2.64
D. $2.74
E. $2.80



$2.00 invested at 4% annual interest at the end of 8 years \(= (1.04)^8*2 = $2.74\)

Answer: option D


@Bunual : Keen to see official answer to see How you do the calculation of \(1.04^8\) without calculator as per GMAT standard.
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New post 21 Dec 2017, 05:32
Bunuel wrote:
If $2.00 were invested at 4% annual interest at the end of 8 years the total value of investment would be

A. $1.63
B. $2.08
C. $2.64
D. $2.74
E. $2.80


The question doesn't say whether it is simple interest or compound. Since nothing is mentioned and the time period is 8 years, I am inclined to assume simple interest and move on.

A = P (1 + RT/100) = 2 (1 + 4*8/100) = $2.64

Answer (C)
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Re: If $2.00 were invested at 4% annual interest at the end of 8 years the [#permalink]

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New post 21 Dec 2017, 05:42
VeritasPrepKarishma wrote:
Bunuel wrote:
If $2.00 were invested at 4% annual interest at the end of 8 years the total value of investment would be

A. $1.63
B. $2.08
C. $2.64
D. $2.74
E. $2.80


The question doesn't say whether it is simple interest or compound. Since nothing is mentioned and the time period is 8 years, I am inclined to assume simple interest and move on.

A = P (1 + RT/100) = 2 (1 + 4*8/100) = $2.64

Answer (C)


Don't you think, That would be a very specific assumption???

In general case, If nothing is mentioned about the interest calculation whether it's SIMPLE INTEREST or COMPOUND INTEREST then the normal understanding goes with COMPOUND Interest as Simple interest has disappeared from practicality
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Re: If $2.00 were invested at 4% annual interest at the end of 8 years the   [#permalink] 21 Dec 2017, 05:42
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