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24 Dec 2017, 22:42
00:00

Difficulty:

25% (medium)

Question Stats:

83% (01:35) correct 17% (02:57) wrong based on 37 sessions

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Jon invested $20000 in a certain stock exactly three years ago. The value of the stocks increased by 15 percent during the first year, increased by 10 percent during the second year, and decreased by 5 percent during the third year. What is the value of the stocks today? A.$22,000
B. $24,000 C.$24,035
D. $26,000 E.$26,565

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Posts: 868
Re: Jon invested $20000 in a certain stock exactly three years ago. The va [#permalink] ### Show Tags 24 Dec 2017, 23:43 Bunuel wrote: Jon invested$20000 in a certain stock exactly three years ago. The value of the stocks increased by 15 percent during the first year, increased by 10 percent during the second year, and decreased by 5 percent during the third year. What is the value of the stocks today?

A. $22,000 B.$24,000
C. $24,035 D.$26,000
E. $26,565 We'll show two ways to solve this problem. The first is an extremely fast approximation which is an Alternative approach. We gained 10% then 15% then lost 5% over the 3 years. Had our interest been exactly 10 + 15 - 5 = 20% then the answer would be (B) -$24,000.
But - due to cumulative interest and the fact that losing 5% is more money than gaining 5%, we know our answer is near to $24,000 but not exactly$24,000.
Since (C) is the only such answer it must be correct and we can move on having done almost no (potentialy confusing) calculations.

The Precise approach is standard - calculate the total increase
20,000 * 1.1 = 22,000
22,000 *1.15 = 22,000 + 2,200 + 1,100 = 25,300
25,300 * 0.95 = 25,300 - 2530/2 = 25,300 - 1265 = 24,035
As above, (C) is our answer.
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Re: Jon invested $20000 in a certain stock exactly three years ago. The va [#permalink] ### Show Tags 25 Dec 2017, 11:16 Bunuel wrote: Jon invested$20000 in a certain stock exactly three years ago. The value of the stocks increased by 15 percent during the first year, increased by 10 percent during the second year, and decreased by 5 percent during the third year. What is the value of the stocks today?

A. $22,000 B.$24,000
C. $24,035 D.$26,000
E. $26,565 Value of Stock today is: $$20000*(1+0.15)*(1+0.10)*(1-0.05)=20000*1.15*1.1*0.95=24035$$ (C) is the answer. Current Student Joined: 14 Jun 2017 Posts: 22 Location: United States GMAT 1: 710 Q48 V38 GPA: 2.8 Re: Jon invested$20000 in a certain stock exactly three years ago. The va  [#permalink]

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25 Dec 2017, 11:25
Jon invested $20000 in a certain stock exactly three years ago. The value of the stocks- Increased by 15 percent during the first year, therefore, at the end of year 1 the value of the stock was$20k * 1.15= $23k. Further increased by 10 percent during the second year, therefore, at the end of year 2 the value of the stock was$23k * 1.10= $25.3k Eventually decreased (unfortunately) by 5 percent during the third year, so, at the end of year 3 the value of stock is$25.3 *.95= $24,035. Hence C. Re: Jon invested$20000 in a certain stock exactly three years ago. The va &nbs [#permalink] 25 Dec 2017, 11:25
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