Mo2men wrote:
Bunuel wrote:
If a sum of money grows to 144/121 times when invested for two years in a scheme where interest is compounded annually, how long will the same sum of money take to trebleif invested at the same rate of interest in a scheme where interest is computed using simple interest method?
(A) 9 years
(B) 18 years
(C) 22 years
(D) 31 years
(E) 33 years
Bunuel I think it should be 'triple'
Also, I think the OA is wrong.
Compound annually: Total = P (1+r/n)^nt...where p is original amount & r is interest rate & t is number of years & n: number of compounding annually.
Total = \(\frac{144}{121}\)P
\(\frac{144}{121}\)P = P (1+r)^2.......\(\frac{12}{11}\)= (1+r).........r = \(\frac{1}{11}\)
Apply in simple interest formula
Total = P * r * #of years
3P = P * \(\frac{1}{11}\) * Y.............Y = 33
Answer must be E
Dear GMATPrepNow Brent,
Can you help and shed lught on the solution above?
Thanks in advance
Be careful, the formula you stated "Total = P * r * #of years" is a formula for finding the INTEREST (not the total value of the investment)
There's also a problem with the 3P part of your equation.
Notice that, if we start with a $10 investment, and its value triples to $30, this means the investment received $20 in interest.
We want the investment to go from P to 3P
Well P + 2P = 3P
So, we want the TOTAL INTEREST to equal 2P
We get: 2P = (P)(interest rate)(#of years)
Or: 2P = (P)(1/11)(x)
Solve to get x = 22
Cheers,
Brent