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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, 03:15
3
20
00:00

Difficulty:

35% (medium)

Question Stats:

74% (01:47) correct 26% (02:27) wrong based on 683 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

Originally posted by vanidhar on 04 Nov 2010, 03:53.
Last edited by Bunuel on 06 Apr 2018, 03:15, 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, 05:21
10
5
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 Learn more about how Veritas Prep can help you achieve a great GMAT score by checking out their GMAT Prep Options > ##### Most Helpful Community Reply Senior Manager Status: Not afraid of failures, disappointments, and falls. Joined: 20 Jan 2010 Posts: 264 Concentration: Technology, Entrepreneurship WE: Operations (Telecommunications) Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 04 Nov 2010, 08:41 7 Answer: A 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) http://www.youtube.com/watch?v=F-QA2rkpBSY Hope it helps _________________ "I choose to rise after every fall" Target=770 http://challengemba.blogspot.com Kudos?? ##### General Discussion Math Expert Joined: 02 Sep 2009 Posts: 52294 Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 13 Feb 2011, 12:05 1 7 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. _________________ Intern Joined: 31 Aug 2012 Posts: 6 Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 08 Sep 2012, 20:07 How do you know to divide by 8 and not .08? Senior Manager Joined: 15 Jun 2010 Posts: 297 Schools: IE'14, ISB'14, Kellogg'15 WE 1: 7 Yrs in Automobile (Commercial Vehicle industry) Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 08 Sep 2012, 22:50 1 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?
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Re: If money is invested at r percent interest compounded annual  [#permalink]

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09 Sep 2012, 04:44
2
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  [#permalink]

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18 Feb 2015, 01:07
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.

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

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02 Jul 2017, 04:54
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

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

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06 Apr 2018, 03:16
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 &nbs [#permalink] 06 Apr 2018, 03:16
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