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

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

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