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

It is currently 22 May 2019, 04:44

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

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
Manager
avatar
Joined: 02 Dec 2012
Posts: 174
If money is invested at r percent interest, compounded annua  [#permalink]

Show Tags

New post 17 Dec 2012, 06:46
6
54
00:00
A
B
C
D
E

Difficulty:

  35% (medium)

Question Stats:

74% (01:55) correct 26% (02:18) wrong based on 1571 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
Most Helpful Expert Reply
Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 55228
Re: If money is invested at r percent interest, compounded annua  [#permalink]

Show Tags

New post 17 Dec 2012, 06:48
10
9
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.
_________________
General Discussion
Intern
Intern
avatar
B
Joined: 09 Feb 2013
Posts: 24
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
Intern
Intern
User avatar
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

New post 24 Aug 2014, 15:25
3
1
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
User avatar
D
Joined: 16 Oct 2010
Posts: 9232
Location: Pune, India
If money is invested at r percent interest, compounded annua  [#permalink]

Show Tags

New post 10 Oct 2014, 20:42
1
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 >
SVP
SVP
User avatar
Status: The Best Or Nothing
Joined: 27 Dec 2012
Posts: 1812
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
1
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.
EMPOWERgmat Instructor
User avatar
V
Status: GMAT Assassin/Co-Founder
Affiliations: EMPOWERgmat
Joined: 19 Dec 2014
Posts: 14188
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

New post 03 Mar 2015, 23:35
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

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

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/
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!
Senior Manager
Senior Manager
avatar
B
Joined: 23 Sep 2015
Posts: 371
Location: France
GMAT 1: 690 Q47 V38
GMAT 2: 700 Q48 V38
WE: Real Estate (Mutual Funds and Brokerage)
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
_________________
EMPOWERgmat Instructor
User avatar
V
Status: GMAT Assassin/Co-Founder
Affiliations: EMPOWERgmat
Joined: 19 Dec 2014
Posts: 14188
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

New post 25 Dec 2015, 12:07
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

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

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

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/
Target Test Prep Representative
User avatar
G
Status: Head GMAT Instructor
Affiliations: Target Test Prep
Joined: 04 Mar 2011
Posts: 2823
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
_________________

Jeffrey Miller

Head of GMAT Instruction

Jeff@TargetTestPrep.com
TTP - Target Test Prep Logo
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.

VP
VP
User avatar
D
Joined: 09 Mar 2016
Posts: 1284
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
Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 55228
Re: If money is invested at r percent interest, compounded annua  [#permalink]

Show Tags

New post 06 Apr 2018, 04:10
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).

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.
_________________
Manager
Manager
avatar
B
Joined: 25 Sep 2018
Posts: 56
If money is invested at r percent interest, compounded annua  [#permalink]

Show Tags

New post 08 May 2019, 05:17
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


Here,

Money will be doubled in 70/.08=9 years (apprx.)

Initial money was= 5000

Every 9 year money will be doubled.

So, after 18 (9*2) years it'll be (5000*2*2)=20000

Answer is A

Posted from my mobile device
CEO
CEO
User avatar
V
Joined: 12 Sep 2015
Posts: 3722
Location: Canada
Re: If money is invested at r percent interest, compounded annua  [#permalink]

Show Tags

New post 08 May 2019, 06:09
1
Top Contributor
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


GIVEN: At r percent interest, the amount of the investment will double in approximately 70/r years
So, at 8 percent interest, the time for the investment to double = 70/89
So, the investment will double every 9 years

We can now create a growth table:
Initially, the investment is worth $5,000
After 9 years, the investment is worth $10,000
After 18 years, the investment is worth $20,000

Answer: A

Cheers,
Brent
_________________
Test confidently with gmatprepnow.com
Image
GMAT Club Bot
Re: If money is invested at r percent interest, compounded annua   [#permalink] 08 May 2019, 06:09
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  


Copyright

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