Problem Solving

If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat's parents invested $5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college?

(A) $20000
(B) $15000
(C) $12000
(D) $10000
(E) $9000

OAA

Please explain.

kamalj wrote:If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat's parents invested $5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college?

(A) $20000
(B) $15000
(C) $12000
(D) $10000
(E) $9000

OAA

Please explain.

If the investment doubles every 70/r years, and r = 8, then we know the investment will double every 70/8, or approximately 9 years. In 18 years, the investment will double twice.

After 9 years: 5000*2 = 10,000
After 18 years: 10,000*2 = 20,000

The answer is A

(And I wrote a post about a similarly themed question here: https://www.veritasprep.com/blog/2016/0 ... -the-gmat/