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The number of years it would take for the value of an investment to do

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The number of years it would take for the value of an investment to do [#permalink]

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New post 08 Apr 2017, 03:49
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Question Stats:

60% (01:09) correct 40% (00:53) wrong based on 53 sessions

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The number of years it would take for the value of an investment to double,at 26% interest compounded annually, is approximately which of the following?

A)2
B)3
C)4
D)5
E)6
[Reveal] Spoiler: OA

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Re: The number of years it would take for the value of an investment to do [#permalink]

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New post 08 Apr 2017, 04:39
Suppose invested amount $100. Number of years = t.

then,
200 = 100*(1 + .26)^t
=>(1.26)^t = 2
=>t = 3;

Answer B.

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Re: The number of years it would take for the value of an investment to do [#permalink]

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New post 08 Apr 2017, 06:29
stonecold wrote:
The number of years it would take for the value of an investment to double,at 26% interest compounded annually, is approximately which of the following?

A)2
B)3
C)4
D)5
E)6


\(A = P ( 1 + \frac{r}{100})^n\)

\(200 = 100 ( 1 + \frac{26}{100})^n\)

\(2 = ( 1 + \frac{26}{100})^n\)

\(2 = 1.26^n\)

Now, calculate -

\(1.26^2 = 1.59\)
\(1.26^3 = 2.00\)

Thus, approximately 3 years is required to double the amount at 26% interest, answer must be (B)
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Re: The number of years it would take for the value of an investment to do [#permalink]

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New post 09 Apr 2017, 07:02
stonecold wrote:
The number of years it would take for the value of an investment to double,at 26% interest compounded annually, is approximately which of the following?

A)2
B)3
C)4
D)5
E)6


An invest ment doubles itself in approximately (72/r) years.

Hence this investment will double itself in 72/26 or 3 years approximately.

Correct Option: B

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Re: The number of years it would take for the value of an investment to do [#permalink]

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New post 20 Nov 2017, 13:32
If we want to avoid calculation we can consider this interest as simple interest. At a simple interest of 26%, in two years return is 52% and in four years 104% which is more than double. Thus three years is the only suitable option.
Because aptitude papers like GMAT doesn't really test calculation skills of test taker, approximation is better approach.
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Re: The number of years it would take for the value of an investment to do   [#permalink] 20 Nov 2017, 13:32
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