PS compound interest rate

Question

Dear Guys,

Here is it ; I solved it but it tooks some time ; may be you know better apprach :

Ã„ sum of money deposited at a certain rate of compound interest will be doubled in 14 years. At this rate , how many years will it take for an account with an initial balance of $3,000 to reach a balance of $12,000

Answers : 56; 28 ; 21; 14; 7 ;

B/R
Oh Gal Len

PracticeMore · Answer

2P=P(1+r)^14 or (1+r)^14 = 2

now 12000 = 3000 (1+r) ^x

so (1+r)^x = 4 = ((1+r)^14) ^2

or (1+r)^x = (1+r)^28

so x = 28

Let me know if this is correct, this took about a minute.

oh gal len · Answer

PracticeMore , you are right. It took a time for me since I did not knew a formula . I was trying to solve it logically , but it did not worked :-)

)) So I searched through i-net and found formula . I thought here might be some other approach , that's why I post this question on the site. B/R Oh Gal Len

Paul · Answer

Yes, besides reading the problem, doing the problem did not take long. If your amount doubles in 14 years, then 3k will reach 6k in 14 years. Then, it will take just another 15 years for 6k to double into 12k. 14+14=28

It may also be useful, although certainly outside of the GMAT scope, to know the rule of 72. If it takes 14 years to double an investment, then 72/14 = approx 5 which represents the interest rate.

PS compound interest rate

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