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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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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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New post 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.
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New post 04 Nov 2010, 09:41
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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
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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).

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

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New post 08 Sep 2012, 21:07
How do you know to divide by 8 and not .08?
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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?
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New post 09 Sep 2012, 05:44
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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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New post 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 [#permalink]

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New post 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 [#permalink]

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New post 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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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.


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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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