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Math Expert V
Joined: 02 Sep 2009
Posts: 58396
Saul invests an amount of dollars in investment A at i% simple annual  [#permalink]

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Difficulty:   95% (hard)

Question Stats: 43% (02:25) correct 57% (02:23) wrong based on 145 sessions

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Saul invests an amount of dollars in investment A at i% simple annual interest, another amount in investment B at j% simple annual interest, and a third amount in investment C at k% simple annual interest. If the percent interest rates i, j, and k are in a ratio of 3:2:4, what is the ratio of the average rate of interest on all three investments (taken together) to the interest rate on investment A?

(1) The amounts Saul invested in investments A, B, and C are in a ratio of 1:4:5.

(2) Saul’s three investments total $100,000, while the total amount of money he earns in interest in the first year is$18,600

Kudos for a correct solution.

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Originally posted by Bunuel on 28 Apr 2015, 05:26.
Last edited by Bunuel on 04 May 2015, 04:29, edited 3 times in total.
Part of question was missed
Manager  B
Joined: 26 May 2013
Posts: 92
Re: Saul invests an amount of dollars in investment A at i% simple annual  [#permalink]

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St(1) provides enough information to answer the question.

With information from St(1) you have the ratio of interest rates, and the ratio of amounts, which will allow you to determine the answer.

Since the return and amounts are both contained by ratios, each moves in lockstep of another.
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GMAT 1: 660 Q48 V33 GMAT 2: 740 Q50 V40 Re: Saul invests an amount of dollars in investment A at i% simple annual  [#permalink]

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1
ak1802 wrote:
St(1) provides enough information to answer the question.

With information from St(1) you have the ratio of interest rates, and the ratio of amounts, which will allow you to determine the answer.

Since the return and amounts are both contained by ratios, each moves in lockstep of another.

Hello ak1802.
When you gave your answer in second statement of task was missed number $18600. I think that's why you didn't give complete solution. _________________ Manager  Joined: 27 Dec 2013 Posts: 199 Re: Saul invests an amount of dollars in investment A at i% simple annual [#permalink] Show Tags Option A for me. Nice question. Let the year be same. .... you have you evaluate. The ratios of A+B+C/3 : A (reamains the same) Bunuel wrote: Saul invests an amount of dollars in investment A at i% simple annual interest, another amount in investment B at j% simple annual interest, and a third amount in investment C at k% simple annual interest. If the percent interest rates i, j, and k are in a ratio of 3:2:4, what is the ratio of the average rate of interest on all three investments (taken together) to the interest rate on investment A? (1) The amounts Saul invested in investments A, B, and C are in a ratio of 1:4:5. (2) Saul’s three investments total$100,000, while the total amount of money he earns in interest in the first year is $18,600 Kudos for a correct solution. _________________ Kudos to you, for helping me with some KUDOS. Manager  B Joined: 26 May 2013 Posts: 92 Re: Saul invests an amount of dollars in investment A at i% simple annual [#permalink] Show Tags Harley1980 wrote: ak1802 wrote: St(1) provides enough information to answer the question. With information from St(1) you have the ratio of interest rates, and the ratio of amounts, which will allow you to determine the answer. Since the return and amounts are both contained by ratios, each moves in lockstep of another. Hello ak1802. When you gave your answer in second statement of task was missed number$18600.
I think that's why you didn't give complete solution.

Thanks for the updated info.

With a complete statement (2) I would change my answer to D.

Both statements sufficiently answer the question.

St(1) for reasons stated above.
St(2) because it gives you the total interest earned. This information, combined with the ratio in the stem is enough to answer the question at hand.

D.
Retired Moderator Joined: 06 Jul 2014
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GMAT 1: 660 Q48 V33 GMAT 2: 740 Q50 V40 Re: Saul invests an amount of dollars in investment A at i% simple annual  [#permalink]

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1
Bunuel wrote:
Saul invests an amount of dollars in investment A at i% simple annual interest, another amount in investment B at j% simple annual interest, and a third amount in investment C at k% simple annual interest. If the percent interest rates i, j, and k are in a ratio of 3:2:4, what is the ratio of the average rate of interest on all three investments (taken together) to the interest rate on investment A?

(1) The amounts Saul invested in investments A, B, and C are in a ratio of 1:4:5.

(2) Saul’s three investments total $100,000, while the total amount of money he earns in interest in the first year is$18,600

Kudos for a correct solution.

1) From this statement we can find that for example our money parts equal to $$100$$, $$400$$ and $$500$$ and percents to 3%, 2%, 4% and ratio will be $$\frac{9}{31}$$
If we change this numbers - ratio will be the same
Sufficient.

2) I think that from this statement we have a lot of different variants especially if we can have $$0$$ parts:
for example $$32500*0.24 + 67500*0.16 = 18600$$

Or different variants with 3 parts:
$$10000*0.18 + 40000*0.12 + 50000*0.24 = 18600$$ or
$$50000*0.18 + 20000*0.12 + 30000 *0.24 = 18600$$ etc
And in all this cases we wil have different ratios so this statement is
Insufficient

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Re: Saul invests an amount of dollars in investment A at i% simple annual  [#permalink]

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1
Bunuel wrote:
Saul invests an amount of dollars in investment A at i% simple annual interest, another amount in investment B at j% simple annual interest, and a third amount in investment C at k% simple annual interest. If the percent interest rates i, j, and k are in a ratio of 3:2:4, what is the ratio of the average rate of interest on all three investments (taken together) to the interest rate on investment A?

(1) The amounts Saul invested in investments A, B, and C are in a ratio of 1:4:5.

(2) Saul’s three investments total $100,000, while the total amount of money he earns in interest in the first year is$18,600

Ans: A

given: ratio of Interest rate for A, B, and C. i:j:k::3:2:4
1) gives us the ratio of Investment A:B:C::1:4:5
if we take total value in terms of the ratio ie. 100, 400, 500 OR 1000,4000,5000
and rate in ratio of the same (as given in the question) we can get the required ration
the average rate of interest on all three investments (taken together) to the interest rate on investment A = 31/9.
: Sufficient
2) it gives us the total investment A+B+C but not the exact distribution of the Investment so we can't find the asked ratio.
:Insufficient
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Math Expert V
Joined: 02 Sep 2009
Posts: 58396
Re: Saul invests an amount of dollars in investment A at i% simple annual  [#permalink]

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Bunuel wrote:
Saul invests an amount of dollars in investment A at i% simple annual interest, another amount in investment B at j% simple annual interest, and a third amount in investment C at k% simple annual interest. If the percent interest rates i, j, and k are in a ratio of 3:2:4, what is the ratio of the average rate of interest on all three investments (taken together) to the interest rate on investment A?

(1) The amounts Saul invested in investments A, B, and C are in a ratio of 1:4:5.

(2) Saul’s three investments total $100,000, while the total amount of money he earns in interest in the first year is$18,600

Kudos for a correct solution.

MANHATTAN GMAT OFFICIAL SOLUTION:

For 3-way ratios (such as 3:2:4), use the unknown multiplier to reduce the number of variables. If x is an unknown multiplier for the interest rates, then i = 3x, j = 2x, and k = 4x. The question asks for the ratio of the average rate of interest on all 3 investments (taken together) to the interest rate on investment A, which is i or 3x. (We can ignore the fact that technically, we should divide these variables by 100: i% = i/100, but this adds complexity that doesn’t matter in the end, because all the interest rates are expressed the same way. Let’s just pretend that all the interest rates are expressed as decimals, so we don’t have to divide by 100 everywhere.)

First of all, we should note that the “average rate of interest” is not the simple average of 3x, 2x, and 4x, which would equal 3x. (For one thing, that would mean that the ratio is 1 before we even look at the statements, and Data Sufficiency questions can never be answered simply from the givens in the question stem.) Rather, we must figure out the interest in dollars across all 3 investments, add up that interest, and then divide by the total investment to get the effective interest rate – which will be a weighted average of the 3 interest rates, weighted by the amounts invested in each investment.

We could name the invested amounts a, b, and c. Then the dollar interest on investment A is the invested amount a times the interest rate 3x, or 3xa. Likewise, the dollar interest on investment B is 2xb, and the dollar interest on investment C is 4xc. The total dollar interest is 3xa + 2xb + 4xc, and then we’d divide by a + b + c to get the weighted average interest rate. The ratio of this result to 3x is the desired quantity. (Let’s not write it out yet!)

Statement 1: SUFFICIENT. We have another 3-way ratio:

a:b:c = 1:4:5

So let’s use another unknown multiplier (say, y).

a = y
b = 4y
c = 5y

Now figure the total dollar interest: 3xy + 2x(4y) + 4x(5y) = 31xy. The total invested amount is y + 4y + 5y = 10y, so the weighted average interest rate is 31xy / (10y) = 3.1x. The ratio of this average interest rate to the interest rate on investment A, 3x, is 3.1x / (3x) = 3.1/3 = a definite number. Both unknown multipliers cancel away. This statement is sufficient.

Statement 2: NOT SUFFICIENT.

Remember to go back to a, b, and c for the amounts invested. We know that the total amount invested is $100,000, so we can eliminate one of these variables: c = 100,000 – (a + b) We also have that the total interest in dollars is$18,600, so we know that the overall weighted average interest rate is 18.6%. The question then becomes, is the value of x fixed under these conditions? If so, then the ratio we want is fixed.

The total dollar interest is 3xa + 2xb + 4xc = 3xa + 2xb + 4x(100,000 – (a + b)) = 18,600.

We can factor out an x, but the a’s and b’s will not fully cancel away, so the value of x is not fixed. Thus the desired ratio can take on different values.

The correct answer is A.
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Saul invests an amount of dollars in investment A at i% simple annual  [#permalink]

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Bunuel wrote:
Bunuel wrote:
Saul invests an amount of dollars in investment A at i% simple annual interest, another amount in investment B at j% simple annual interest, and a third amount in investment C at k% simple annual interest. If the percent interest rates i, j, and k are in a ratio of 3:2:4, what is the ratio of the average rate of interest on all three investments (taken together) to the interest rate on investment A?

(1) The amounts Saul invested in investments A, B, and C are in a ratio of 1:4:5.

(2) Saul’s three investments total $100,000, while the total amount of money he earns in interest in the first year is$18,600

Kudos for a correct solution.

MANHATTAN GMAT OFFICIAL SOLUTION:

For 3-way ratios (such as 3:2:4), use the unknown multiplier to reduce the number of variables. If x is an unknown multiplier for the interest rates, then i = 3x, j = 2x, and k = 4x. The question asks for the ratio of the average rate of interest on all 3 investments (taken together) to the interest rate on investment A, which is i or 3x. (We can ignore the fact that technically, we should divide these variables by 100: i% = i/100, but this adds complexity that doesn’t matter in the end, because all the interest rates are expressed the same way. Let’s just pretend that all the interest rates are expressed as decimals, so we don’t have to divide by 100 everywhere.)

First of all, we should note that the “average rate of interest” is not the simple average of 3x, 2x, and 4x, which would equal 3x. (For one thing, that would mean that the ratio is 1 before we even look at the statements, and Data Sufficiency questions can never be answered simply from the givens in the question stem.) Rather, we must figure out the interest in dollars across all 3 investments, add up that interest, and then divide by the total investment to get the effective interest rate – which will be a weighted average of the 3 interest rates, weighted by the amounts invested in each investment.

We could name the invested amounts a, b, and c. Then the dollar interest on investment A is the invested amount a times the interest rate 3x, or 3xa. Likewise, the dollar interest on investment B is 2xb, and the dollar interest on investment C is 4xc. The total dollar interest is 3xa + 2xb + 4xc, and then we’d divide by a + b + c to get the weighted average interest rate. The ratio of this result to 3x is the desired quantity. (Let’s not write it out yet!)

Statement 1: SUFFICIENT. We have another 3-way ratio:

a:b:c = 1:4:5

So let’s use another unknown multiplier (say, y).

a = y
b = 4y
c = 5y

Now figure the total dollar interest: 3xy + 2x(4y) + 4x(5y) = 31xy. The total invested amount is y + 4y + 5y = 10y, so the weighted average interest rate is 31xy / (10y) = 3.1x. The ratio of this average interest rate to the interest rate on investment A, 3x, is 3.1x / (3x) = 3.1/3 = a definite number. Both unknown multipliers cancel away. This statement is sufficient.

Statement 2: NOT SUFFICIENT.

Remember to go back to a, b, and c for the amounts invested. We know that the total amount invested is $100,000, so we can eliminate one of these variables: c = 100,000 – (a + b) We also have that the total interest in dollars is$18,600, so we know that the overall weighted average interest rate is 18.6%. The question then becomes, is the value of x fixed under these conditions? If so, then the ratio we want is fixed.

The total dollar interest is 3xa + 2xb + 4xc = 3xa + 2xb + 4x(100,000 – (a + b)) = 18,600.

We can factor out an x, but the a’s and b’s will not fully cancel away, so the value of x is not fixed. Thus the desired ratio can take on different values.

The correct answer is A.

Hi Bunuel
Thanks for clarifying an important point that the numerator in the ratio isn't the average of the three interest rates.
My query is how do we know that we have been asked a weight based average & not an arithmetic mean. I know one clue was that the question stem itself had the solution, but isn't weight based average thing must be clearly mentioned. Saul invests an amount of dollars in investment A at i% simple annual   [#permalink] 25 Aug 2019, 18:18
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