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# Jaya invests in a new mutual fund. The fund averages 10% growth annual

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Math Expert
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Jaya invests in a new mutual fund. The fund averages 10% growth annual  [#permalink]

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28 Feb 2016, 09:49
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15% (low)

Question Stats:

81% (01:52) correct 19% (02:05) wrong based on 114 sessions

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Jaya invests in a new mutual fund. The fund averages 10% growth annually for the first three years, but it loses 30% of its value in the fourth year. At the end of four years, the value of the mutual fund is approximately what percent of the amount Jaya originally paid?

A. 93%
B. 90%
C. 88%
D. 85%
E. 80%

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Joined: 25 Dec 2012
Posts: 116
Re: Jaya invests in a new mutual fund. The fund averages 10% growth annual  [#permalink]

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28 Feb 2016, 12:58
Bunuel wrote:
Jaya invests in a new mutual fund. The fund averages 10% growth annually for the first three years, but it loses 30% of its value in the fourth year. At the end of four years, the value of the mutual fund is approximately what percent of the amount Jaya originally paid?

A. 93%
B. 90%
C. 88%
D. 85%
E. 80%

Let the initial amount be 100.
Since it grew on constant basis as 10% for three years = 100*1.1^3 = 11*11*1.1 = 132 [Taking 1.1 as 1]
It eroded by 30% = 132 * .7 = 92.something approximated to 93%

IMO A
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Re: Jaya invests in a new mutual fund. The fund averages 10% growth annual  [#permalink]

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28 Feb 2016, 16:37
1
Bunuel wrote:
Jaya invests in a new mutual fund. The fund averages 10% growth annually for the first three years, but it loses 30% of its value in the fourth year. At the end of four years, the value of the mutual fund is approximately what percent of the amount Jaya originally paid?

A. 93%
B. 90%
C. 88%
D. 85%
E. 80%

Since we only need % I am going to ignore the initial amount all together

After 3rd year amount % growth would be 1.1^3 =>1.331*(Orig Amt) or 133.1% growth
At the end of 4th year it drop to 70% in value => 1.331 * 0.7 => 0.9317 of Original value
Therefore at the end of 4th year value remaining was only 93%, hence A
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Re: Jaya invests in a new mutual fund. The fund averages 10% growth annual  [#permalink]

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06 May 2016, 09:28
1
For principal p

$$\frac{P*(1,1)^3*0,7}{P}$$

$$(1,1)^3*0,7 = 0,93$$
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Re: Jaya invests in a new mutual fund. The fund averages 10% growth annual  [#permalink]

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06 May 2016, 10:45
1
Bunuel wrote:
Jaya invests in a new mutual fund. The fund averages 10% growth annually for the first three years, but it loses 30% of its value in the fourth year. At the end of four years, the value of the mutual fund is approximately what percent of the amount Jaya originally paid?

A. 93%
B. 90%
C. 88%
D. 85%
E. 80%

Let the amount invested be 100

Value of the firm after 1st year is 110% of 100 = 110

Value of the firm after 2nd year is 110% of 110 = 121

Value of the firm after 3rd year is 110% of 121 = 131.10

Value of the firm after 4th year is 70% of 131.10 = 93.17

So, The correct answer will be (A) 93%
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Re: Jaya invests in a new mutual fund. The fund averages 10% growth annual  [#permalink]

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07 Jun 2017, 20:02
Bunuel wrote:
Jaya invests in a new mutual fund. The fund averages 10% growth annually for the first three years, but it loses 30% of its value in the fourth year. At the end of four years, the value of the mutual fund is approximately what percent of the amount Jaya originally paid?

A. 93%
B. 90%
C. 88%
D. 85%
E. 80%

Quite simply, we can set up an algebraic expression- no need to apply any finance formulas

x(1.1)^3(.7) is what of x? Pick a simple integer like 1

$1(1.1)^3 (.7)$1.331 (.7)
.9317 is what of 1? Now, we can quickly derive the answer because we picked a simple integer such as 1.

Hence,

"A"
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Re: Jaya invests in a new mutual fund. The fund averages 10% growth annual  [#permalink]

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06 Dec 2019, 15:40
Hi All,

We're told that a mutual fund averages 10% growth annually for the first three years, but it loses 30% of its value in the fourth year. We're asked for the value of the mutual fund, at the end of 4 years, is approximately what percent of the amount originally paid for it. This question can be solved in a couple of different ways, including by TESTing VALUES.

IF... the original purchase price of the fund was $100... then the value at the end of the 1st year was$100 + (.1)($100) =$110
then the value at the end of the 2nd year was $110 + (.1)($110) = $121 then the value at the end of the 3rd year was$121 + (.1)($121) =$133.10

and the value at the end of the 4th year was approximately $133 - (.3)($133) = $133 -$39.90 = approximately $93$93 out of the original \$100 is 93/100 = 93%

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Re: Jaya invests in a new mutual fund. The fund averages 10% growth annual  [#permalink]

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08 Dec 2019, 20:39
Bunuel wrote:
Jaya invests in a new mutual fund. The fund averages 10% growth annually for the first three years, but it loses 30% of its value in the fourth year. At the end of four years, the value of the mutual fund is approximately what percent of the amount Jaya originally paid?

A. 93%
B. 90%
C. 88%
D. 85%
E. 80%

After 4 years, the value is:

1.1 x 1.1 x 1.1 x 0.7 = 0.9317, which is about 93%.

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Re: Jaya invests in a new mutual fund. The fund averages 10% growth annual   [#permalink] 08 Dec 2019, 20:39
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