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

For principal p

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

\((1,1)^3*0,7 = 0,93\)

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%

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"

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%

Final Answer:

GMAT assassins aren't born, they're made,
Rich

After 4 years, the value is:

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

Answer: A