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Last year a certain bond with a face value of $5,000 yielded 8 percent

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Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 11 Apr 2012, 02:38
3
18
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A
B
C
D
E

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  25% (medium)

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79% (00:57) correct 21% (01:01) wrong based on 570 sessions

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Last year a certain bond with a face value of $5,000 yielded 8 percent of its face value in interest. If that interest was approximately 6.5 percent of the bond's selling price,approximately what was the bond's selling price?

A. $4,063
B. $5,325
C. $5,351
D. $6,000
E. $6,154
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Re: Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 11 Nov 2013, 11:19
11
6
sapna44 wrote:
Last year a certain bond price with a face value of 5000 yielded 8% of its face value in interest. If that interest was approx 6.5 of the bond's selling price approx what was the bond's selling price?
A. 4063
B. 5325
C. 5351
D. 6000
E. 6154

ronr34 wrote:
Hi Mike,
I found this question and I tried to approximate....
What I did was approximate the selling price as 6 instead of 6.5 and got something along the lines of 6666.
Luckily I chose the answer that was closes to it, but if I had approximated to 7 instead, I may have gotten stuck
between answers D and E.... Can you help with this?

Dear ronr34,
I'm happy to help. :-)

Remember, one criterion for approximation is that the answer choices be far apart and well-spaced. Here, the answers are not particularly far apart, so we are much more restricted in the kinds of approximating we can do. Here's how I would think about it.

First of all, 8% of $5000 is $400. For this part, it should be easy to calculate the exact value.

Now, 6.5% of the selling price is $400.
Let x = selling price
0.065*x = 400
To be honest, the answers are close enough together that I don't want to approximate 6.5 to either 6 or 7. Here's what I am going to do. First, I will multiply both sides by 100.
6.5*x = 40,000
Now, here is think is the big key to solving this problem easily --- change the decimal 6.5 to the fraction 13/2. In 90% of all cases, fractions are MUCH MUCH EASIER for calculation than are decimals!!
(13/2)*x = 40,000
13*x = 80,000

x = 80,000/13

Well, 13*6 = 78, so 13 goes into 80 six times, with a remainder of 2. That means, x is more than 6000. That's enough to isolate (E).

A totally different strategy --- backsolving. Once we know 6.5% of x is $400, plug in answer choices to see where we are. Normally, I would recommend starting with (C) --- see:
http://magoosh.com/gmat/2012/gmat-plugg ... -choice-c/
Here, though, many of the answers are warthog-ugly numbers, but the question is handing us answer (D) on a golden platter as an ideal candidate for backsolving. (Incidentally, that's a very handy trick to have up your sleeve --- four ugly number answer choices, and one nice round number: chances are extremely good that backsolving with that one nice round number will help you find the answer quickly.)

What's 6.5% of $6000?

Well, 1% of $6000 is $60.
Six times that means: 6% of $6000 is $360.
Now, divide the 1% line in half --- 0.5% of $6000 is $30.
Now, add the last two lines --- 6.5% of $6000 is $390.

Thus, if x = 6000, then 6.5% of it is not big enough. We need something bigger than $6000, and the only choice is (E).

Does all this make sense?
Mike :-)





Does all this make sense?
Mike :-)
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Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 11 Apr 2012, 03:01
2
3
sapna44 wrote:
Last year a certain bond with a face value of $5,000 yielded 8 percent of its face value in interest. If that interest was approximately 6.5 percent of the bond's selling price,approximately what was the bond's selling price?

A. $4,063
B. $5,325
C. $5,351
D. $6,000
E. $6,154


Interest = 0.08*5000 = 0.065*selling price --> selling price = 0.08*5000/0.065 --> selling price = ~6,154

Answer: E.
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Re: Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 12 Apr 2012, 16:05
Bunuel wrote:
sapna44 wrote:
Last year a certain bond price with a face value of 5000 yielded 8 % of its face value in interest. If that interest was approx 6.5 of the bond's selling price approx what was the bond's selling price ?

A. 4063
B. 5325
C. 5351
D. 6000
E. 6154


Interest = 0.08*5000 = 0.065*selling price --> selling price = 0.08*5000/0.065 --> selling price = ~6,154

Answer: E.


Ahh, I got this question, and got it right on my MGMAT practice exam.

The point being, I am and accountant, and I wish Bonds were so easy to calculate.
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Re: Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 30 Aug 2013, 11:09
1
Bunuel wrote:
sapna44 wrote:
Last year a certain bond price with a face value of 5000 yielded 8 % of its face value in interest. If that interest was approx 6.5 of the bond's selling price approx what was the bond's selling price ?

A. 4063
B. 5325
C. 5351
D. 6000
E. 6154


Interest = 0.08*5000 = 0.065*selling price --> selling price = 0.08*5000/0.065 --> selling price = ~6,154

Answer: E.


I got confused with the wording "bond's selling price" :evil:
I started wondering "Who sold it? Do we need to find how much it was bought? What quantity?" :oops:

It could just ask "What's 6.5 % of the interest earned?".
I hate when I get stuck in these kind of things in quant and end up wasting my time in one simple question!
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Re: Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 11 Nov 2013, 13:20
mikemcgarry wrote:
sapna44 wrote:
Last year a certain bond price with a face value of 5000 yielded 8% of its face value in interest. If that interest was approx 6.5 of the bond's selling price approx what was the bond's selling price?
A. 4063
B. 5325
C. 5351
D. 6000
E. 6154

ronr34 wrote:
Hi Mike,
I found this question and I tried to approximate....
What I did was approximate the selling price as 6 instead of 6.5 and got something along the lines of 6666.
Luckily I chose the answer that was closes to it, but if I had approximated to 7 instead, I may have gotten stuck
between answers D and E.... Can you help with this?

Dear ronr34,
I'm happy to help. :-)

Remember, one criterion for approximation is that the answer choices be far apart and well-spaced. Here, the answers are not particularly far apart, so we are much more restricted in the kinds of approximating we can do. Here's how I would think about it.

First of all, 8% of $5000 is $400. For this part, it should be easy to calculate the exact value.

Now, 6.5% of the selling price is $400.
Let x = selling price
0.065*x = 400
To be honest, the answers are close enough together that I don't want to approximate 6.5 to either 6 or 7. Here's what I am going to do. First, I will multiply both sides by 100.
6.5*x = 40,000
Now, here is think is the big key to solving this problem easily --- change the decimal 6.5 to the fraction 13/2. In 90% of all cases, fractions are MUCH MUCH EASIER for calculation than are decimals!!
(13/2)*x = 40,000
13*x = 80,000

x = 80,000/13

Well, 13*6 = 78, so 13 goes into 80 six times, with a remainder of 2. That means, x is more than 6000. That's enough to isolate (E).

A totally different strategy --- backsolving. Once we know 6.5% of x is $400, plug in answer choices to see where we are. Normally, I would recommend starting with (C) --- see:
http://magoosh.com/gmat/2012/gmat-plugg ... -choice-c/
Here, though, many of the answers are warthog-ugly numbers, but the question is handing us answer (D) on a golden platter as an ideal candidate for backsolving. (Incidentally, that's a very handy trick to have up your sleeve --- four ugly number answer choices, and one nice round number: chances are extremely good that backsolving with that one nice round number will help you find the answer quickly.)

What's 6.5% of $6000?

Well, 1% of $6000 is $60.
Six times that means: 6% of $6000 is $360.
Now, divide the 1% line in half --- 0.5% of $6000 is $30.
Now, add the last two lines --- 6.5% of $6000 is $390.

Thus, if x = 6000, then 6.5% of it is not big enough. We need something bigger than $6000, and the only choice is (E).

Does all this make sense?
Mike :-)





Does all this make sense?
Mike :-)


Thanks Mike!!!!
Great answer, I hope I still have enough time to try and work
it into my toolbox.... :)
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Re: Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 29 Dec 2015, 12:56
sapna44 wrote:
Last year a certain bond price with a face value of 5000 yielded 8% of its face value in interest. If that interest was approx 6.5 of the bond's selling price approx what was the bond's selling price?

A. 4063
B. 5325
C. 5351
D. 6000
E. 6154


8% from 5000=400 ->\(400=\frac{6,5}{100}*S\) (Selling price) = \(\frac{400*20}{1.3}\), here we can estimate... \(\frac{40}{13}\)~3, so \(400/1.3\) ~ 3000 (actually more) 3000*2=6000 we need an answer choice which is slightly more than 6000, hence Answer E
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Re: Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 05 Mar 2016, 06:18
I have a query.It says approx 6.5 of the bond's selling price ,but above 6.5% has been considered.Why is that?can anybody explain.
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Re: Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 06 Mar 2016, 11:49
1
bhamini1 wrote:
I have a query.It says approx 6.5 of the bond's selling price ,but above 6.5% has been considered.Why is that?can anybody explain.

Dear bhamini1,
I'm happy to respond. :-) My friend, the person who posted the question made a mistake. Whoever posted the question omitted the word "percent" after the 6.5. About 90% of the questions posted on GMAT Club are posted by students, and students don't always do a perfect job of posting a question.

My friend, one of the most important skills to have, on the GMAT and in the business world, is critical thinking. See this blog article:
Doing GMAT Critical Reasoning
You cannot simply believe everything is mistake-free and meant to be trusted as is. If you interpret everything literally as if the world is a perfect place, then unscrupulous people in the business world will cheat you out of everything. You have to be cunningly clever to succeed on the GMAT and in the business world.

My friend, I want to support your success in every way I can. Does all this make sense?
Mike :-)
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Re: Last year a certain bond with a face value of $5,000 yielded 8 percent  [#permalink]

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New post 05 Dec 2017, 19:41
sapna44 wrote:
Last year a certain bond price with a face value of 5000 yielded 8% of its face value in interest. If that interest was approx 6.5 of the bond's selling price approx what was the bond's selling price?

A. 4063
B. 5325
C. 5351
D. 6000
E. 6154


We are given that a certain bond with a face value of $5,000 yielded 8% of its face value in interest. Thus, we can determine the interest as follows:

5,000 x 0.08 = 400

We also know that the $400 of interest was approximately 6.5% of the bond's selling price. Thus, we can create the following equation, where p = the bond’s selling price:

400 = 0.065 x p

400/0.065 = p

400,000/65 = p

6,154 ≈ p

Answer: E
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Re: Last year a certain bond with a face value of $5,000 yielded 8 percent &nbs [#permalink] 05 Dec 2017, 19:41
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