It is currently 20 Oct 2017, 06:07

### 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

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

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# If money is invested at r percent interest compounded annual

 new topic post reply Question banks Downloads My Bookmarks Reviews Important topics
Author Message
TAGS:

### Hide Tags

Manager
Status: GMAT Preperation
Joined: 04 Feb 2010
Posts: 101

Kudos [?]: 186 [2], given: 15

Concentration: Social Entrepreneurship, Social Entrepreneurship
GPA: 3
WE: Consulting (Insurance)
If money is invested at r percent interest compounded annual [#permalink]

### Show Tags

04 Nov 2010, 04:53
2
KUDOS
13
This post was
BOOKMARKED
00:00

Difficulty:

25% (medium)

Question Stats:

75% (01:06) correct 25% (01:52) wrong based on 503 sessions

### HideShow timer Statistics

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
[Reveal] Spoiler: OA

Last edited by Bunuel on 09 Sep 2012, 02:48, edited 1 time in total.
Edited the question.

Kudos [?]: 186 [2], given: 15

Veritas Prep GMAT Instructor
Joined: 16 Oct 2010
Posts: 7676

Kudos [?]: 17365 [8], given: 232

Location: Pune, India
Re: compounded annually .. spending too much time [#permalink]

### Show Tags

04 Nov 2010, 06:21
8
KUDOS
Expert's post
3
This post was
BOOKMARKED
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

Veritas Prep Reviews

Kudos [?]: 17365 [8], given: 232

Senior Manager
Status: Not afraid of failures, disappointments, and falls.
Joined: 20 Jan 2010
Posts: 290

Kudos [?]: 260 [5], given: 260

Concentration: Technology, Entrepreneurship
WE: Operations (Telecommunications)
Re: compounded annually .. spending too much time [#permalink]

### Show Tags

04 Nov 2010, 09:41
5
KUDOS
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
_________________

"I choose to rise after every fall"
Target=770
http://challengemba.blogspot.com
Kudos??

Kudos [?]: 260 [5], given: 260

Manager
Joined: 10 Nov 2010
Posts: 247

Kudos [?]: 401 [0], given: 22

Location: India
Concentration: Strategy, Operations
GMAT 1: 520 Q42 V19
GMAT 2: 540 Q44 V21
WE: Information Technology (Computer Software)

### Show Tags

13 Feb 2011, 12:52
Pls check the image attached
Attachments

CA.JPG [ 37.48 KiB | Viewed 15311 times ]

_________________

The proof of understanding is the ability to explain it.

Kudos [?]: 401 [0], given: 22

Math Expert
Joined: 02 Sep 2009
Posts: 41890

Kudos [?]: 128966 [1], given: 12185

Re: Compound Amount [#permalink]

### Show Tags

13 Feb 2011, 13:05
1
KUDOS
Expert's post
4
This post was
BOOKMARKED
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).

_________________

Kudos [?]: 128966 [1], given: 12185

Intern
Joined: 31 Aug 2012
Posts: 6

Kudos [?]: [0], given: 0

Re: compounded annually .. spending too much time [#permalink]

### Show Tags

08 Sep 2012, 21:07
How do you know to divide by 8 and not .08?

Kudos [?]: [0], given: 0

Senior Manager
Joined: 15 Jun 2010
Posts: 358

Kudos [?]: 453 [0], given: 50

Schools: IE'14, ISB'14, Kellogg'15
WE 1: 7 Yrs in Automobile (Commercial Vehicle industry)
Re: compounded annually .. spending too much time [#permalink]

### Show Tags

08 Sep 2012, 23:50
1
This post was
BOOKMARKED
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 Kudos [?]: 453 [0], given: 50 Manager Joined: 24 Jul 2011 Posts: 75 Kudos [?]: 153 [0], given: 5 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? Kudos [?]: 153 [0], given: 5 GMAT Club Legend Joined: 09 Sep 2013 Posts: 16635 Kudos [?]: 273 [0], given: 0 Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 07 Feb 2014, 08:03 Hello from the GMAT Club BumpBot! Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos). Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email. _________________ Kudos [?]: 273 [0], given: 0 GMAT Club Legend Joined: 09 Sep 2013 Posts: 16635 Kudos [?]: 273 [0], given: 0 Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 17 Feb 2015, 12:43 Hello from the GMAT Club BumpBot! Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos). Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email. _________________ Kudos [?]: 273 [0], given: 0 Intern Joined: 15 Jan 2015 Posts: 24 Kudos [?]: 10 [0], given: 1 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 Kudos [?]: 10 [0], given: 1 Intern Joined: 29 Oct 2014 Posts: 24 Kudos [?]: 12 [0], given: 14 Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 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. Kudos [?]: 12 [0], given: 14 EMPOWERgmat Instructor Status: GMAT Assassin/Co-Founder Affiliations: EMPOWERgmat Joined: 19 Dec 2014 Posts: 9984 Kudos [?]: 3412 [2], given: 172 Location: United States (CA) GMAT 1: 800 Q51 V49 GRE 1: 340 Q170 V170 Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 03 Mar 2015, 23:35 2 This post received KUDOS Expert's post 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

[Reveal] Spoiler:
A

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

# 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/ ***********************Select EMPOWERgmat Courses now include ALL 6 Official GMAC CATs!*********************** Kudos [?]: 3412 [2], given: 172 Senior Manager Status: Math is psycho-logical Joined: 07 Apr 2014 Posts: 437 Kudos [?]: 139 [0], given: 169 Location: Netherlands GMAT Date: 02-11-2015 WE: Psychology and Counseling (Other) Re: If money is invested at r percent interest compounded annual [#permalink] ### Show Tags 04 Mar 2015, 04:38 SOURH7WK wrote: 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?

Also, I guess that even if you did 70 / 0.08 and ended up in 875, this would have alarmed you that it is not possible to wait 875 years for the amount of the investment to doulbe... Even like this, the next thought would be to divide by 8.

Kudos [?]: 139 [0], given: 169

Intern
Joined: 29 Oct 2014
Posts: 24

Kudos [?]: 12 [0], given: 14

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

### Show Tags

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!

Kudos [?]: 12 [0], given: 14

BSchool Forum Moderator
Joined: 23 Sep 2015
Posts: 405

Kudos [?]: 87 [0], given: 72

Location: France
GMAT 1: 690 Q47 V38
GMAT 2: 700 Q48 V38
WE: Real Estate (Mutual Funds and Brokerage)
Re: If money is invested at r percent interest compounded annual [#permalink]

### Show Tags

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.

Maybe because they said approximate and that they gave 70/r to help. Otherwise, goodluck computing a power of 18 without a calculator
_________________

New Application Tracker : update your school profiles instantly!

Kudos [?]: 87 [0], given: 72

GMAT Club Legend
Joined: 09 Sep 2013
Posts: 16635

Kudos [?]: 273 [0], given: 0

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

### Show Tags

14 Jan 2017, 22:13
Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________

Kudos [?]: 273 [0], given: 0

VP
Status: Learning
Joined: 20 Dec 2015
Posts: 1070

Kudos [?]: 69 [0], given: 533

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.
_________________

We are more often frightened than hurt; and we suffer more from imagination than from reality

Kudos [?]: 69 [0], given: 533

Re: If money is invested at r percent interest compounded annual   [#permalink] 02 Jul 2017, 05:54
Display posts from previous: Sort by

# If money is invested at r percent interest compounded annual

 new topic post reply Question banks Downloads My Bookmarks Reviews Important topics

 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®.