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Difficulty:   25% (medium)

Question Stats: 72% (01:36) correct 28% (02:08) wrong based on 80 sessions

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[Math Revolution GMAT math practice question]

Tom saved $10,000 at a constant compound interest rate of r percent annually. After 10 years, the balance is double the principal. What will be the balance 30 years after the deposit? A.$30,000
B. $40,000 C.$50,000
D. $60,000 E.$80,000

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Manager  S
Joined: 18 Oct 2018
Posts: 90
Location: India
Concentration: Finance, International Business
GMAT 1: 710 Q50 V36 GPA: 4
WE: Business Development (Retail Banking)
Re: Tom saved $10,000 at a constant compound interest rate of r percent an [#permalink] Show Tags 1 The question says,the balance got doubled in 10 years of time.This means Balance after 10 years is 10,000*2= 20,000$ .Going by the same logic, and since in 20 years, the balance will be double of the balance in 10 years, which means 20,000*2= 40,000$. In another 10 years, that means, at the end of 30 years, the balance will again double up. The final balance will thus become 40,000*2= 80,000$.

Hence Answer is E
Math Revolution GMAT Instructor V
Joined: 16 Aug 2015
Posts: 8027
GMAT 1: 760 Q51 V42 GPA: 3.82

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MathRevolution wrote:
=>

After $$10$$ years, we have $$10,000(1+r)^{10} = 20,000$$ or $$(1+r)^{10} = 2.$$
So, after $$30$$ years the balance is $$10,000(1+r)^{30} = 10,000((1+r)^{10})^3= 10,000*2^3 =10,000*8 = 80,000.$$

Therefore, the answer is E.

Hello MathRevolution !

Where does the next formula come from?

$$10,000(1+r)^{10} = 20,000$$

Thank you in advance.

Kind regards! Re: Tom saved $10,000 at a constant compound interest rate of r percent an [#permalink] 20 Jan 2019, 17:20 Display posts from previous: Sort by Tom saved$10,000 at a constant compound interest rate of r percent an

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