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Pat invested x dollars in a fund that paid 8 percent annual interest,

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Pat invested x dollars in a fund that paid 8 percent annual interest, [#permalink]

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New post 20 Jan 2017, 07:08
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  15% (low)

Question Stats:

78% (00:41) correct 22% (00:41) wrong based on 67 sessions

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Pat invested x dollars in a fund that paid 8 percent annual interest, compounded annually. Which of the following represents the value, in dollars, of Pat's investment plus interest at the end of 5 years&

A. 5(0.08x)
B. 5(1.08x)
C. (1+5(0.08))x
D. (1.08)^5 *x
E. (1.08x)^5

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Re: Pat invested x dollars in a fund that paid 8 percent annual interest, [#permalink]

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New post 20 Jan 2017, 08:46
Bunuel wrote:
Pat invested x dollars in a fund that paid 8 percent annual interest, compounded annually. Which of the following represents the value, in dollars, of Pat's investment plus interest at the end of 5 years&

A. 5(0.08x)
B. 5(1.08x)
C. (1+5(0.08))x
D. (1.08)^5 *x
E. (1.08x)^5

\(Amount = Principal ( 1 + \frac{Rate}{100})^{No \ of \ Years}\)

\(Amount = x ( 1 + \frac{8}{100})^5\)

\(Amount = x ( 1.08)^5\)

Hence, correct answer will be (D) \(x ( 1.08)^5\)
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Re: Pat invested x dollars in a fund that paid 8 percent annual interest, [#permalink]

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New post 11 Mar 2018, 13:12
Is that the formula for simple interest?

I'm familiar with the compound interest formula, but never use this formula when the answer choices is an integer... usually, I just repeatedly multiply out... this question is an exception...
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Pat invested x dollars in a fund that paid 8 percent annual interest, [#permalink]

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New post 11 Mar 2018, 13:31
OCDianaOC wrote:
Is that the formula for simple interest?

I'm familiar with the compound interest formula, but never use this formula when the answer choices is an integer... usually, I just repeatedly multiply out... this question is an exception...


Hi OCDianaOC

This is the formula for compound interest when done yearly

\(A = P*(1 + \frac{r}{100})^{n}\)
where
n - number of years
r - rate of interest
A - Amount realized at the end of n years
P - Principal invested initially

Coming back to this problem

Pat invests x(Principal) at 8%(R) for 5(n) years

Therefore, Amount = x*\((1 + \frac{8}{100})^5\) = x*\((1.08)^5\)(Option D)

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Re: Pat invested x dollars in a fund that paid 8 percent annual interest, [#permalink]

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New post 11 Mar 2018, 14:20
Thank you! In that case, learning the simple interest formula isn't necessary for the GMAT, right? For simple interest questions, there is never the formula in the answer choices, always an integer instead?
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Re: Pat invested x dollars in a fund that paid 8 percent annual interest, [#permalink]

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New post 12 Mar 2018, 09:56
OCDianaOC wrote:
Thank you! In that case, learning the simple interest formula isn't necessary for the GMAT, right? For simple interest questions, there is never the formula in the answer choices, always an integer instead?

Both are necessary, please go through this link to clear the concept

https://magoosh.com/gre/2012/compound-i ... n-the-gre/
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Thanks and Regards

Abhishek....

PLEASE FOLLOW THE RULES FOR POSTING IN QA AND VA FORUM AND USE SEARCH FUNCTION BEFORE POSTING NEW QUESTIONS

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Re: Pat invested x dollars in a fund that paid 8 percent annual interest,   [#permalink] 12 Mar 2018, 09:56
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