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 Pat's parents invested $5,000
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- DavidG@VeritasPrep
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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.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.
After 9 years: 5000*2 = 10,000
After 18 years: 10,000*2 = 20,000
The answer is A
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(And I wrote a post about a similarly themed question here: https://www.veritasprep.com/blog/2016/0 ... -the-gmat/
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- Brent@GMATPrepNow
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Given: r = percent interestkamalj 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
Given: Investment DOUBLES in approximately 70/r years.
Pat's parents invest $5,000 at 8 percent
70/8 ≈ 9
In other words, the investment will DOUBLE every 9 years.
Value of investment after 0 years: $5,000
Value of investment after 9 years: $5,000 x 2 = $10,000
Value of investment after 18 years: $10,000 x 2 = $20,000
Answer: A
Cheers,
Brent