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Joined: 27 Dec 2011
Posts: 5
Last year a certain bond with a face value of $5,000 yielded 8 percent [#permalink] ### Show Tags 11 Apr 2012, 01:38 3 21 00:00 Difficulty: 25% (medium) Question Stats: 80% (01:56) correct 20% (01:59) wrong based on 593 sessions ### HideShow timer Statistics 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

### Show Tags

11 Nov 2013, 10:19
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
_________________

Mike McGarry
Magoosh Test Prep

Education is not the filling of a pail, but the lighting of a fire. — William Butler Yeats (1865 – 1939)

##### General Discussion
Math Expert
Joined: 02 Sep 2009
Posts: 50578
Last year a certain bond with a face value of $5,000 yielded 8 percent [#permalink] ### Show Tags 11 Apr 2012, 02:01 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. _________________ Manager Joined: 29 Mar 2010 Posts: 121 Location: United States Concentration: Finance, International Business GMAT 1: 590 Q28 V38 GPA: 2.54 WE: Accounting (Hospitality and Tourism) Re: Last year a certain bond with a face value of$5,000 yielded 8 percent  [#permalink]

### Show Tags

12 Apr 2012, 15:05
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

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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Manager
Joined: 26 Feb 2013
Posts: 155

### Show Tags

11 Nov 2013, 12:20
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....
Director
Joined: 10 Mar 2013
Posts: 512
Location: Germany
Concentration: Finance, Entrepreneurship
GMAT 1: 580 Q46 V24
GPA: 3.88
WE: Information Technology (Consulting)

### Show Tags

05 Mar 2016, 05:18
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.
Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4488

### Show Tags

05 Dec 2017, 18:41
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

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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, 18:41 Display posts from previous: Sort by # Last year a certain bond with a face value of$5,000 yielded 8 percent

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