GMAT Changed on April 16th - Read about the latest changes here

It is currently 22 Apr 2018, 05:10

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

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

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

3 KUDOS received
Manager
Manager
avatar
Joined: 02 Dec 2012
Posts: 178
If money is invested at r percent interest, compounded annua [#permalink]

Show Tags

New post 17 Dec 2012, 06:46
3
This post received
KUDOS
31
This post was
BOOKMARKED
00:00
A
B
C
D
E

Difficulty:

  35% (medium)

Question Stats:

73% (01:31) correct 27% (01:51) wrong based on 1266 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
[Reveal] Spoiler: OA
Expert Post
3 KUDOS received
Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 44600
Re: If money is invested at r percent interest, compounded annua [#permalink]

Show Tags

New post 17 Dec 2012, 06:48
3
This post received
KUDOS
Expert's post
9
This post was
BOOKMARKED
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.
_________________

New to the Math Forum?
Please read this: Ultimate GMAT Quantitative Megathread | All You Need for Quant | PLEASE READ AND FOLLOW: 12 Rules for Posting!!!

Resources:
GMAT Math Book | Triangles | Polygons | Coordinate Geometry | Factorials | Circles | Number Theory | Remainders; 8. Overlapping Sets | PDF of Math Book; 10. Remainders | GMAT Prep Software Analysis | SEVEN SAMURAI OF 2012 (BEST DISCUSSIONS) | Tricky questions from previous years.

Collection of Questions:
PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. ,11 Mixed Questions, 12 Fresh Meat

DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS; 9 Devil's Dozen!!!; 10 Number Properties set., 11 New DS set.


What are GMAT Club Tests?
Extra-hard Quant Tests with Brilliant Analytics

Intern
Intern
avatar
B
Joined: 09 Feb 2013
Posts: 26
Re: If money is invested at r percent interest, compounded annua [#permalink]

Show Tags

New post 25 Jun 2014, 23:37
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
3 KUDOS received
Intern
Intern
User avatar
Joined: 25 Jul 2014
Posts: 18
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

New post 24 Aug 2014, 15:25
3
This post received
KUDOS
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
Expert Post
Veritas Prep GMAT Instructor
User avatar
P
Joined: 16 Oct 2010
Posts: 8028
Location: Pune, India
If money is invested at r percent interest, compounded annua [#permalink]

Show Tags

New post 10 Oct 2014, 20:42
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
My Blog

Get started with Veritas Prep GMAT On Demand for $199

Veritas Prep Reviews

SVP
SVP
User avatar
Status: The Best Or Nothing
Joined: 27 Dec 2012
Posts: 1837
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

New post 22 Oct 2014, 00:35
5000 will multiply approx. 4 times = 5000 * 4 = 20000

Answer = A
_________________

Kindly press "+1 Kudos" to appreciate :)

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

Show Tags

New post 03 Mar 2015, 23:12
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.

Thanks in advance for your help.
Expert Post
2 KUDOS received
EMPOWERgmat Instructor
User avatar
D
Status: GMAT Assassin/Co-Founder
Affiliations: EMPOWERgmat
Joined: 19 Dec 2014
Posts: 11496
Location: United States (CA)
GMAT 1: 800 Q51 V49
GRE 1: 340 Q170 V170
Re: If money is invested at r percent interest compounded annual [#permalink]

Show Tags

New post 03 Mar 2015, 23:35
2
This post received
KUDOS
Expert's post
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:
[Reveal] Spoiler:
A


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

Show Tags

New post 04 Mar 2015, 17:30
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
avatar
B
Joined: 23 Sep 2015
Posts: 391
Location: France
GMAT 1: 690 Q47 V38
GMAT 2: 700 Q48 V38
WE: Real Estate (Mutual Funds and Brokerage)
Premium Member Reviews Badge
Re: If money is invested at r percent interest compounded annual [#permalink]

Show Tags

New post 23 Nov 2015, 14:00
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 :P
_________________

New Application Tracker : update your school profiles instantly!

Expert Post
EMPOWERgmat Instructor
User avatar
D
Status: GMAT Assassin/Co-Founder
Affiliations: EMPOWERgmat
Joined: 19 Dec 2014
Posts: 11496
Location: United States (CA)
GMAT 1: 800 Q51 V49
GRE 1: 340 Q170 V170
Re: If money is invested at r percent interest, compounded annua [#permalink]

Show Tags

New post 25 Dec 2015, 12:07
Expert's post
1
This post was
BOOKMARKED
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

Final Answer:
[Reveal] Spoiler:
A


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!***********************

Expert Post
Target Test Prep Representative
User avatar
G
Status: Head GMAT Instructor
Affiliations: Target Test Prep
Joined: 04 Mar 2011
Posts: 2273
Re: If money is invested at r percent interest, compounded annua [#permalink]

Show Tags

New post 16 Jun 2016, 06:11
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

Senior Manager
Senior Manager
User avatar
G
Joined: 09 Mar 2016
Posts: 438
Re: If money is invested at r percent interest, compounded annua [#permalink]

Show Tags

New post 06 Apr 2018, 03:59
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
Expert Post
1 KUDOS received
Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 44600
Re: If money is invested at r percent interest, compounded annua [#permalink]

Show Tags

New post 06 Apr 2018, 04:10
1
This post received
KUDOS
Expert's post
1
This post was
BOOKMARKED
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).

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


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.
_________________

New to the Math Forum?
Please read this: Ultimate GMAT Quantitative Megathread | All You Need for Quant | PLEASE READ AND FOLLOW: 12 Rules for Posting!!!

Resources:
GMAT Math Book | Triangles | Polygons | Coordinate Geometry | Factorials | Circles | Number Theory | Remainders; 8. Overlapping Sets | PDF of Math Book; 10. Remainders | GMAT Prep Software Analysis | SEVEN SAMURAI OF 2012 (BEST DISCUSSIONS) | Tricky questions from previous years.

Collection of Questions:
PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. ,11 Mixed Questions, 12 Fresh Meat

DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS; 9 Devil's Dozen!!!; 10 Number Properties set., 11 New DS set.


What are GMAT Club Tests?
Extra-hard Quant Tests with Brilliant Analytics

Re: If money is invested at r percent interest, compounded annua   [#permalink] 06 Apr 2018, 04:10
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  


GMAT Club MBA Forum Home| About| Terms and Conditions| 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®.