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# If money is invested at r percent interest compounded annual

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If money is invested at r percent interest compounded annual [#permalink]

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Updated on: 06 Apr 2018, 04:15
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79% (01:07) correct 21% (01:55) wrong based on 548 sessions

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If money is invested at r percent interest, compounded annually, the amount of investment will double in approximately 70/r years. If Pat's parents invested $5000 in a long term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of investment 18 years later, when Pat is ready for college? A.$20000
B. $15000 C.$12000
D. $10000 E.$9000

OPEN DISCUSSION OF THIS QUESTION IS HERE: https://gmatclub.com/forum/if-money-is- ... 44266.html
[Reveal] Spoiler: OA

Originally posted by vanidhar on 04 Nov 2010, 04:53.
Last edited by Bunuel on 06 Apr 2018, 04:15, edited 2 times in total.
Edited the question.
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Re: If money is invested at r percent interest compounded annual [#permalink]

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04 Nov 2010, 06:21
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vanidhar 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)$20,000
(B) $1 5,000 (C)$1 2,000
(D) $1 0,000 (E)$ 9,000

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

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Re: If money is invested at r percent interest compounded annual [#permalink]

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04 Nov 2010, 09:41
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Karishma has already explained very well and I would like to add some fact here that would be valuable for our daily life problems. This fact of doubling investment (or growth) after every $$\frac{70}{r}$$ where $$r$$ is the $$%age$$ growth or change per unit time, holds true for real life economy calculations. This isn't just true for this particular question but is actually true for our daily life. Check out the following video link (amazing facts)
Hope it helps
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Re: If money is invested at r percent interest compounded annual [#permalink]

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13 Feb 2011, 13:05
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If money is invested at r percent interest, compounded annually, the amount of investment will double in approximately 70/r years. If Pat's parents invested $5000 in a long term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of 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).

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Re: If money is invested at r percent interest compounded annual [#permalink]

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08 Sep 2012, 21:07
How do you know to divide by 8 and not .08?
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Re: If money is invested at r percent interest compounded annual [#permalink]

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08 Sep 2012, 23:50
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go2013gmat wrote:
How do you know to divide by 8 and not .08?

Pay attention to the question stem. The relationship is in %age. So no need to divide it by 100.
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? _________________ Regards SD ----------------------------- Press Kudos if you like my post. Debrief 610-540-580-710(Long Journey): http://gmatclub.com/forum/from-600-540-580-710-finally-achieved-in-4th-attempt-142456.html Manager Joined: 24 Jul 2011 Posts: 73 Location: India Concentration: Strategy, General Management GMAT 1: 670 Q49 V33 WE: Asset Management (Manufacturing) Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 09 Sep 2012, 05:44 2 This post was BOOKMARKED Just to brush up a little theory about Simple and Compound Interests calculation. If P= Principle amount invested r= annual rate of interest ( For 8% annual rate of interest r=8) t= time period in years. Then, $$Simple Interest (SI) = P*r*t$$ For calculation of Compound Interest calculation- if A=accumulated amount (principle + all interest) Then, $$A= P*( 1 +$$ $${r/100}$$$$)^t$$ _________________ My mantra for cracking GMAT: Everyone has inborn talent, however those who complement it with hard work we call them 'talented'. +1 Kudos = Thank You Dear Are you saying thank you? Intern Joined: 15 Jan 2015 Posts: 23 Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 18 Feb 2015, 02:07 If money is invested at r percent interest, compounded annually, the amount of investment will double in approximately 70/r years. If Pat's parents invested$ 5000 in a long term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of investment 18 years later, when Pat is ready for college?

A. $20000 B.$15000
C. $12000 D.$10000
E. $9000 Amount will get doubled after (70/8) years or 8.75 years Amount after 8.75 years = 2*5000 = 10000 Amount after 17.5 years = 2*10000 = 20000 Amount after 18 years will be approx to 20000. Answer A VP Status: Learning Joined: 20 Dec 2015 Posts: 1125 Location: India Concentration: Operations, Marketing GMAT 1: 670 Q48 V36 GRE 1: 314 Q157 V157 GPA: 3.4 WE: Manufacturing and Production (Manufacturing) Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 02 Jul 2017, 05:54 Imo A To Rate of interest =8 % The amount invested doubles in 70/r=70/8 = 8.75 years approximately 9 years 5000(1+8/100)^18 now this difficult to calculate we take help from above In 9 years 5000 will become 10000 and in another 9 years it will become 20,000 Thus A is the answer. _________________ Please give kudos if you found my answers useful Math Expert Joined: 02 Sep 2009 Posts: 44609 Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 06 Apr 2018, 04:16 vanidhar wrote: If money is invested at r percent interest, compounded annually, the amount of investment will double in approximately 70/r years. If Pat's parents invested$ 5000 in a long term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of investment 18 years later, when Pat is ready for college?

A. $20000 B.$15000
C. $12000 D.$10000
E. \$9000

OPEN DISCUSSION OF THIS QUESTION IS HERE: https://gmatclub.com/forum/if-money-is- ... 44266.html
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Re: If money is invested at r percent interest compounded annual   [#permalink] 06 Apr 2018, 04:16
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