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Math Expert V
Joined: 02 Sep 2009
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Pat invested x dollars in a fund that paid 8 percent annual interest,  [#permalink]

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Difficulty:   5% (low)

Question Stats: 83% (00:54) correct 17% (01:03) wrong based on 110 sessions

### HideShow timer Statistics 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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Board of Directors P
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Joined: 11 Jun 2011
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GPA: 3.5
Re: Pat invested x dollars in a fund that paid 8 percent annual interest,  [#permalink]

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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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Intern  B
Joined: 16 Oct 2017
Posts: 37
Re: Pat invested x dollars in a fund that paid 8 percent annual interest,  [#permalink]

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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...
Senior PS Moderator V
Joined: 26 Feb 2016
Posts: 3360
Location: India
GPA: 3.12
Re: Pat invested x dollars in a fund that paid 8 percent annual interest,  [#permalink]

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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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Intern  B
Joined: 16 Oct 2017
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Re: Pat invested x dollars in a fund that paid 8 percent annual interest,  [#permalink]

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

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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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Abhishek....

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Director  V
Joined: 06 Jan 2015
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Location: India
Concentration: Operations, Finance
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Re: Pat invested x dollars in a fund that paid 8 percent annual interest,  [#permalink]

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HI Bunuel

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Math Expert V
Joined: 02 Sep 2009
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Re: Pat invested x dollars in a fund that paid 8 percent annual interest,  [#permalink]

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NandishSS wrote:
HI Bunuel

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Done. Thank you.
_________________ Re: Pat invested x dollars in a fund that paid 8 percent annual interest,   [#permalink] 06 Jan 2019, 05:15
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