Last year

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Last year

by REINE » Wed Mar 22, 2017 12:19 am
Last year, a certain bond with face value of $5000 yielded 8% of its face value in interest. If that interest was approximately 6.5% of the bond selling price. Approximately what was the bond's selling price.
A. $4063
B. $5325
C. $5351
D. $6000
E. $6154

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by Brent@GMATPrepNow » Wed Mar 22, 2017 8:05 am
REINE wrote:Last year, a certain bond with face value of $5000 yielded 8% of its face value in interest. If that interest was approximately 6.5% of the bond selling price. Approximately what was the bond's selling price.
A. $4063
B. $5325
C. $5351
D. $6000
E. $6154
Last year, a certain bond with face value of $5000 yielded 8% of its face value in interest.
8% interest on the $5000 bond = (0.08)(5000) = $400.

... that interest was approximately 6.5% of the bond selling price.
In other words, 6.5% of the selling price ≈ $400

Let B be the bond selling price.
So, 6.5% of B ≈ $400
Rewrite: (6.5/100)B ≈ $400
Multiply both sides by 100/6.5 to get: B ≈ (100/6.5)($400)
Or: B ≈ 40000/6.5
B ≈ 6150

Answer: E

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Brent
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by [email protected] » Wed Mar 22, 2017 12:24 pm
Hi REINE,

This question can be solved with a mix of arithmetic and TESTing THE ANSWERS.

We're told that a bond with a face value of $5,000 yielded 8% in interest. That interest is (5,000)(.08) = $400.

Next, we're told that this interest is approximately 6.5% of the SELLING price of the bond. We're asked for that selling price. Since the answer choices are all possible prices, we can use them 'against' the prompt and find the one - that when you take about 6.5% of it - equals $400.

Let's TEST Answer D: $6,000

(6,000)(.065) = $390

This is too low (remember, it's supposed to be $400), so we're looking for a price that's a bit higher than $6,000. Since there's only one answer that fits that description, it must the answer.

Final Answer: E

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