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

 It is currently 18 Nov 2018, 04:49

### 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

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

## Events & Promotions

###### Events & Promotions in November
PrevNext
SuMoTuWeThFrSa
28293031123
45678910
11121314151617
18192021222324
2526272829301
Open Detailed Calendar
• ### How to QUICKLY Solve GMAT Questions - GMAT Club Chat

November 20, 2018

November 20, 2018

09:00 AM PST

10:00 AM PST

The reward for signing up with the registration form and attending the chat is: 6 free examPAL quizzes to practice your new skills after the chat.
• ### The winning strategy for 700+ on the GMAT

November 20, 2018

November 20, 2018

06:00 PM EST

07:00 PM EST

What people who reach the high 700's do differently? We're going to share insights, tips and strategies from data we collected on over 50,000 students who used examPAL.

# If money is invested at r percent interest, compounded annua

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

### Hide Tags

Manager
Joined: 02 Dec 2012
Posts: 177
If money is invested at r percent interest, compounded annua  [#permalink]

### Show Tags

17 Dec 2012, 05:46
5
39
00:00

Difficulty:

35% (medium)

Question Stats:

74% (01:55) correct 26% (02:16) wrong based on 1602 sessions

### HideShow timer Statistics

If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat's parents invested $5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college? (A)$20000
(B) $15000 (C)$12000
(D) $10000 (E)$9000
Math Expert
Joined: 02 Sep 2009
Posts: 50626
Re: If money is invested at r percent interest, compounded annua  [#permalink]

### Show Tags

17 Dec 2012, 05:48
8
7
If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat's parents invested $5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college? (A)$20000
(B) $15000 (C)$12000
(D) $10000 (E)$9000

Since investment doubles in 70/r years, then for r=8 it'll double in 70/8=~9 years (we are not asked about the exact amount so such an approximation will do). Thus in 18 years investment will double twice and become ($5,000*2)*2=$20,000 (after 9 years investment will become $5,000*2=$10,000 and in another 9 years it'll become $10,000*2=$20,000).

_________________
##### General Discussion
Intern
Joined: 09 Feb 2013
Posts: 25
Re: If money is invested at r percent interest, compounded annua  [#permalink]

### Show Tags

25 Jun 2014, 22:37
It's very important to pay attention to the wordings as first I thought that the compound interest formula needs to be applied.

Though I read the question again and got it correct

Posted from my mobile device
Intern
Joined: 25 Jul 2014
Posts: 14
Concentration: Finance, General Management
GPA: 3.54
WE: Asset Management (Venture Capital)
Re: If money is invested at r percent interest, compounded annua  [#permalink]

### Show Tags

24 Aug 2014, 14:25
3
I think without the 1st sentence, we still can guess the answer easily.

$5,000 at 8%/year =$400/year --> 10-years interest will be $4,000, 20 years will be$8,000
Since the interest compounded annually in 18 years (very long period), the total value would be >$18,000 --> eliminate B,C,D,E Veritas Prep GMAT Instructor Joined: 16 Oct 2010 Posts: 8550 Location: Pune, India If money is invested at r percent interest, compounded annua [#permalink] ### Show Tags 10 Oct 2014, 19:42 If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat's parents invested$5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college?

(A) $20000 (B)$15000
(C) $12000 (D)$10000
(E) $9000 There has to be a logic to why they gave you "If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years." If r = 8%, the principal will double in 70/8 = apprx 9 years. So in 9 years, 5000 will become 10,000. In another 9 years (i.e. 18 years from now) principal will double again and become$20,000.
_________________

Karishma
Veritas Prep GMAT Instructor

Learn more about how Veritas Prep can help you achieve a great GMAT score by checking out their GMAT Prep Options >

GMAT self-study has never been more personalized or more fun. Try ORION Free!

SVP
Status: The Best Or Nothing
Joined: 27 Dec 2012
Posts: 1826
Location: India
Concentration: General Management, Technology
WE: Information Technology (Computer Software)
Re: If money is invested at r percent interest, compounded annua  [#permalink]

### Show Tags

21 Oct 2014, 23:35
1
5000 will multiply approx. 4 times = 5000 * 4 = 20000

_________________

Kindly press "+1 Kudos" to appreciate

Intern
Joined: 29 Oct 2014
Posts: 24
If money is invested at r percent interest, compounded annually,  [#permalink]

### Show Tags

03 Mar 2015, 22:12
Hey all,

Just wondering what in the question made you realise you should solve this question via 5,000 x 2 x 2 rather than using the actual interest formula? i.e. P(1+r/n)^nt?

I used the formula then realised the calcs were too complicated.

EMPOWERgmat Instructor
Status: GMAT Assassin/Co-Founder
Affiliations: EMPOWERgmat
Joined: 19 Dec 2014
Posts: 12877
Location: United States (CA)
GMAT 1: 800 Q51 V49
GRE 1: Q170 V170
Re: If money is invested at r percent interest compounded annual  [#permalink]

### Show Tags

03 Mar 2015, 22:35
2
Hi ColdSushi,

GMAT Quant questions (and the accompanying answer choices) are always carefully written. Sometimes they offer hints as to how you can use estimation to get to the correct answer.

Here, the word 'approximate' in the prompt is essentially telling you to estimate an answer. With an interest rate of 8% and the given formula, you're meant to estimate that the investment will double in 70/8 = about 9 years. The question then asks for the total investment after 18 years. THAT number (18) is not an accident - it was specifically chosen so that you can take advantage of your estimation.

Start = $5000 After 9 years =$10,000
After 18 years = $20,000 Final Answer: GMAT assassins aren't born, they're made, Rich _________________ 760+: Learn What GMAT Assassins Do to Score at the Highest Levels Contact Rich at: Rich.C@empowergmat.com # Rich Cohen Co-Founder & GMAT Assassin Special Offer: Save$75 + GMAT Club Tests Free
Official GMAT Exam Packs + 70 Pt. Improvement Guarantee
www.empowergmat.com/

*****Select EMPOWERgmat Courses now include ALL 6 Official GMAC CATs!*****

Intern
Joined: 29 Oct 2014
Posts: 24
Re: If money is invested at r percent interest compounded annual  [#permalink]

### Show Tags

04 Mar 2015, 16:30
EMPOWERgmatRichC wrote:
Hi ColdSushi,

GMAT Quant questions (and the accompanying answer choices) are always carefully written. Sometimes they offer hints as to how you can use estimation to get to the correct answer.

Here, the word 'approximate' in the prompt is essentially telling you to estimate an answer. With an interest rate of 8% and the given formula, you're meant to estimate that the investment will double in 70/8 = about 9 years. The question then asks for the total investment after 18 years. THAT number (18) is not an accident - it was specifically chosen so that you can take advantage of your estimation.

Start = $5000 After 9 years =$10,000
After 18 years = $20,000 Rich Ah - ok thank you Rich. I def need to pay more attention to these hints. I find myself 60-70% "there" in solving a question i.e. I'd know what the question is asking and the end point (as opposed to 15-20% "there" when I first started studying for the GMAT) but get stuck because I'd miss an important word or picked a harder way to approach a problem. Hopefully things will get better with practice! Retired Moderator Joined: 23 Sep 2015 Posts: 382 Location: France GMAT 1: 690 Q47 V38 GMAT 2: 700 Q48 V38 WE: Real Estate (Mutual Funds and Brokerage) Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 23 Nov 2015, 13:00 ColdSushi wrote: Hey all, Just wondering what in the question made you realise you should solve this question via 5,000 x 2 x 2 rather than using the actual interest formula? i.e. P(1+r/n)^nt? I used the formula then realised the calcs were too complicated. Thanks in advance for your help. Maybe because they said approximate and that they gave 70/r to help. Otherwise, goodluck computing a power of 18 without a calculator _________________ New Application Tracker : update your school profiles instantly! EMPOWERgmat Instructor Status: GMAT Assassin/Co-Founder Affiliations: EMPOWERgmat Joined: 19 Dec 2014 Posts: 12877 Location: United States (CA) GMAT 1: 800 Q51 V49 GRE 1: Q170 V170 Re: If money is invested at r percent interest, compounded annua [#permalink] ### Show Tags 25 Dec 2015, 11:07 Hi All, This question has some similarities to "symbolism" questions (in which the prompt shows you a "made up" symbol, tells you what it means and asks you to do a simple calculation with it). The easiest way to tackle the question is to simply follow the instructions. We're told that r = percent interest. We're also told that an investment with DOUBLE in approximately 70/r years. We're told to invest$5,000 at 8 percent for 18 years.

Plug in r = 8

70/8 is about 9 years, meaning our investment will DOUBLE in 9 years.

In the first 9 years, $5,000 doubles to$10,0000
In the next 9 years, $10,000 doubles to$20,000

GMAT assassins aren't born, they're made,
Rich
_________________

760+: Learn What GMAT Assassins Do to Score at the Highest Levels
Contact Rich at: Rich.C@empowergmat.com

# Rich Cohen

Co-Founder & GMAT Assassin

Special Offer: Save $75 + GMAT Club Tests Free Official GMAT Exam Packs + 70 Pt. Improvement Guarantee www.empowergmat.com/ *****Select EMPOWERgmat Courses now include ALL 6 Official GMAC CATs!***** Target Test Prep Representative Status: Head GMAT Instructor Affiliations: Target Test Prep Joined: 04 Mar 2011 Posts: 2830 Re: If money is invested at r percent interest, compounded annua [#permalink] ### Show Tags 16 Jun 2016, 05:11 Walkabout wrote: If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat's parents invested$5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college?

(A) $20000 (B)$15000
(C) $12000 (D)$10000
(E) $9000 Although this question appears as if we may have to do a lot of calculating, we actually do not. Focus on the first sentence of the question stem. We are given that if money is invested at r percent interest, compounded annually, the amount of investment will double in approximately 70/r years. We are then given that Pat’s parents invest$5,000 at 8 percent interest. It follows that the investment will double after 70/8 years, which is roughly 9 years. With an initial investment of $5,000, the investment will double to$10,000 in about 9 years. In another 9 years (a total of 18 years) the investment will double again to about $20,000. Answer A _________________ Jeffery Miller Head of GMAT Instruction GMAT Quant Self-Study Course 500+ lessons 3000+ practice problems 800+ HD solutions VP Joined: 09 Mar 2016 Posts: 1088 Re: If money is invested at r percent interest, compounded annua [#permalink] ### Show Tags 06 Apr 2018, 02:59 Bunuel wrote: Walkabout wrote: If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat's parents invested$5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college?

(A) $20000 (B)$15000
(C) $12000 (D)$10000
(E) $9000 Since investment doubles in 70/r years, then for r=8 it'll double in 70/8=~9 years (we are not asked about the exact amount so such an approximation will do). Thus in 18 years investment will double twice and become ($5,000*2)*2=$20,000 (after 9 years investment will become$5,000*2=$10,000 and in another 9 years it'll become$10,000*2=$20,000). Answer: A. Bunuel isnt the question asking to calculate the total sum (invested ammound +interest rate) like this $$x = 5000(1+0.08)^9$$ where doest say that we need to calculate only amount ivested i am kinda condused Math Expert Joined: 02 Sep 2009 Posts: 50626 Re: If money is invested at r percent interest, compounded annua [#permalink] ### Show Tags 06 Apr 2018, 03:10 1 dave13 wrote: Bunuel wrote: Walkabout wrote: If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat's parents invested$5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college?

(A) $20000 (B)$15000
(C) $12000 (D)$10000
(E) $9000 Since investment doubles in 70/r years, then for r=8 it'll double in 70/8=~9 years (we are not asked about the exact amount so such an approximation will do). Thus in 18 years investment will double twice and become ($5,000*2)*2=$20,000 (after 9 years investment will become$5,000*2=$10,000 and in another 9 years it'll become$10,000*2=\$20,000).

Bunuel isnt the question asking to calculate the total sum (invested ammound +interest rate) like this $$x = 5000(1+0.08)^9$$ where doest say that we need to calculate only amount ivested i am kinda condused

The question asks to find the approximate total amount of the investment in 18 years. So, (initial investment) + (interest earned in 18 years). If you use interests formula it's $$5000(1+0.08)^{18} \approx 19,980$$. The question also gives a way to calculate this quicker by saying that "if money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years", which all the solutions above used to get the answer.
_________________
Re: If money is invested at r percent interest, compounded annua &nbs [#permalink] 06 Apr 2018, 03:10
Display posts from previous: Sort by

# If money is invested at r percent interest, compounded annua

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

 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®.