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Intern  Joined: 06 Nov 2010
Posts: 30
Location: United States
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WE: Engineering (Other)
Re: Math: Number Theory - Percents  [#permalink]

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Is there an easy way to do 1.03^8, than multiplying 1.03 8 times? I am slow at calculations
Director  Status: Far, far away!
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Re: Math: Number Theory - Percents  [#permalink]

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2
The GMAT won't ask you to calculate that number, maybe you need just an approximation...

$$(1.03)^8=(1.03)^4(1.03)^4=(1.03)^2*(...)=(1+0.03)^2*(...)=(1+0.0009+0.06)*(...)=~(1.06)(1.06)(1.06)(1.06)=~1.12*1.12=~1.25$$
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Re: Math: Number Theory - Percents  [#permalink]

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Bumping for review*.

*New project from GMAT Club!!! Check HERE

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Re: Math: Number Theory - Percents  [#permalink]

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Hi,
Nice post ... ready reckoner Manager  Joined: 21 Jan 2014
Posts: 93
GMAT 1: 500 Q32 V28
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Re: Math: Number Theory - Percents  [#permalink]

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Great Post and thanks Bunuel for sharing it!

I have one question based on the following question:

Example: If $20,000 is invested at 12% annual interest, compounded quarterly, what is the balance after 2 year? Solution: Balance=20,000∗(1+0.12/4)^2∗4=Balance=20,000∗(1+0.12/4)^2∗4= =20,000∗(1.03)^8=25,335.4 20,000∗(1.03)^8: How am I supposed to perform this calculation in less than 2 minutes? there must be a shortcut in order to avoid perform the exponents. Does someone knows something about? Thanks in advance! Math Expert V Joined: 02 Sep 2009 Posts: 64939 Re: Math: Number Theory - Percents [#permalink] ### Show Tags pepo wrote: Great Post and thanks Bunuel for sharing it! I have one question based on the following question: Example: If$20,000 is invested at 12% annual interest, compounded quarterly, what is the balance after 2 year?
Solution: Balance=20,000∗(1+0.12/4)^2∗4=Balance=20,000∗(1+0.12/4)^2∗4=
=20,000∗(1.03)^8=25,335.4

20,000∗(1.03)^8: How am I supposed to perform this calculation in less than 2 minutes? there must be a shortcut in order to avoid perform the exponents.

Thank you.
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Manager  Joined: 21 Jan 2014
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Re: Math: Number Theory - Percents  [#permalink]

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Bunuel wrote:
pepo wrote:
Great Post and thanks Bunuel for sharing it!

I have one question based on the following question:

Example: If $20,000 is invested at 12% annual interest, compounded quarterly, what is the balance after 2 year? Solution: Balance=20,000∗(1+0.12/4)^2∗4=Balance=20,000∗(1+0.12/4)^2∗4= =20,000∗(1.03)^8=25,335.4 20,000∗(1.03)^8: How am I supposed to perform this calculation in less than 2 minutes? there must be a shortcut in order to avoid perform the exponents. Does someone knows something about? Thanks in advance! Please read the whole thread: math-number-theory-percents-91708-40.html#p1202382 Thank you. Already read it, I but don't get the easyness CEO  G Joined: 20 Mar 2014 Posts: 2531 Concentration: Finance, Strategy Schools: Kellogg '18 (M) GMAT 1: 750 Q49 V44 GPA: 3.7 WE: Engineering (Aerospace and Defense) Math: Number Theory - Percents [#permalink] ### Show Tags pepo wrote: Bunuel wrote: pepo wrote: Great Post and thanks Bunuel for sharing it! I have one question based on the following question: Example: If$20,000 is invested at 12% annual interest, compounded quarterly, what is the balance after 2 year?
Solution: Balance=20,000∗(1+0.12/4)^2∗4=Balance=20,000∗(1+0.12/4)^2∗4=
=20,000∗(1.03)^8=25,335.4

20,000∗(1.03)^8: How am I supposed to perform this calculation in less than 2 minutes? there must be a shortcut in order to avoid perform the exponents.

Thank you.

Already read it, I but don't get the easyness You are considering this question in complete vacuum and as such not helping yourself in understanding the nuances involved.

You can also look at it this way: for any period >1 , compound interest > simple interest (or CI is JUST greater than SI) for the same rate.

Rate of interest for quarterly compounding = 12/3 = 3%

Number of quarters in 2 years = 8

Thus SI for this= 20000*3*8/100 = 4800 ---> balance after 2 years = 20000+4800=24800 and hence the final answer will be just greater than 24800. Now in GMAT PS, if the options given to you are spread far apart, then this approximation will give you the correct answer.

But if not, then use the binomial theorem to calculate $$(1.03)^8$$: $$(1.03)^8 = (1+0.03)^8 = 1^8*(0.03)^0+8*1^7*(0.03)^1+28*1^6*(0.03)^2$$.... (this last term and the following terms will have 0.03 in 0.03^3 and higher powers making these terms very small compared with others, so neglect them).

Thus, $$(1.03)^8 = (1+0.03)^8 = 1^8*(0.03)^0+8*1^7*(0.03)^1 = 1+0.24 \approx$$ 1.24

Hope this helps.

P.S.: Binomial theorem expansion for $$(a+b)^n = \sum_{\substack{0\leq k\leq n}} \binom{n}{k} a^n*b^k$$, where $$\binom{n}{k} = {C^n_k}$$
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Manager  Joined: 21 Jan 2014
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Re: Math: Number Theory - Percents  [#permalink]

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I haven't heard about binomial theorem so I thing I will go for approximation.
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Joined: 22 Sep 2018
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Re: Math: Number Theory - Percents  [#permalink]

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Even though I red this article and, in addition, red percents chapter in MGMT, I still face difficulties to solve percents questions when practicing with GMAT type questions. This means that I have conceptual gaps. Can you please advise in depth resource for percents for newbies like me? Re: Math: Number Theory - Percents   [#permalink] 13 Jun 2020, 10:20

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