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If money is invested at r percent interest compounded annual
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Updated on: 06 Apr 2018, 04:15
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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/ifmoneyis ... 44266.html
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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
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04 Nov 2010, 06:21
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 longterm 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.
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Re: If money is invested at r percent interest compounded annual
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04 Nov 2010, 09:41
Answer: AKarishma 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) http://www.youtube.com/watch?v=FQA2rkpBSYHope it helps
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Re: If money is invested at r percent interest compounded annual
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13 Feb 2011, 13:05
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). Answer: A.
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Re: If money is invested at r percent interest compounded annual
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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
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08 Sep 2012, 23:50
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 longterm 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?
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Re: If money is invested at r percent interest compounded annual
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09 Sep 2012, 05:44
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, \(A= P*( 1 +\) \({r/100}\)\()^t\)
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Re: If money is invested at r percent interest compounded annual
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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



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Re: If money is invested at r percent interest compounded annual
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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.
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Re: If money is invested at r percent interest compounded annual
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