This year, a woman has a lucrative one-year position. During this year, she will give a fraction f of her salary to her husband, a private investor, to invest and they will live this year on the remainder. Through investments, her husband can turn each dollar she gives him into 1 + r, which will be deposited in a bank account. Their goal is to save & invest enough money so they can live off this money for two years following the end of the wife's position. Toward this end, they want to choose f such that the amount in the account at the end of the year is twice what they lived off this year. In terms of r, what should f be?
A. 1/(r+1)
B. 2/(r+2)
C. 2/(2r+1)
D. 2/(r+3)
E. 2/(2r+3)
Answer: D
Source: Magoosh
This year, a woman has a lucrative one-year position. During this year, she will give
This topic has expert replies
-
- Legendary Member
- Posts: 1223
- Joined: Sat Feb 15, 2020 2:23 pm
- Followed by:1 members
Timer
00:00
Your Answer
A
B
C
D
E
Global Stats
GMAT/MBA Expert
- Brent@GMATPrepNow
- GMAT Instructor
- Posts: 16207
- Joined: Mon Dec 08, 2008 6:26 pm
- Location: Vancouver, BC
- Thanked: 5254 times
- Followed by:1268 members
- GMAT Score:770
Let T = the woman's total salary for the yearBTGModeratorVI wrote: ↑Thu Aug 20, 2020 7:08 amThis year, a woman has a lucrative one-year position. During this year, she will give a fraction f of her salary to her husband, a private investor, to invest and they will live this year on the remainder. Through investments, her husband can turn each dollar she gives him into 1 + r, which will be deposited in a bank account. Their goal is to save & invest enough money so they can live off this money for two years following the end of the wife's position. Toward this end, they want to choose f such that the amount in the account at the end of the year is twice what they lived off this year. In terms of r, what should f be?
A. 1/(r+1)
B. 2/(r+2)
C. 2/(2r+1)
D. 2/(r+3)
E. 2/(2r+3)
Answer: D
Source: Magoosh
During this year, she will give a fraction f of her salary to her husband, a private investor, to invest and they will live this year on the remainder.
So, the amount SAVED (and then given to huspand)= fT
This means the amount SPENT = T - fT (total salary minus the amount saved)
In other words, T - fT = living expenses for ONE year
Through investments, her husband can turn each dollar she gives him into 1 + r, which will be deposited in a bank account.
Many will struggle converting this info to an algebraic expression.
When this happens, start by examining a few easier scenarios and then try to generalize. Here's what I mean:
If the husband is given 1 dollar, then he will turn that into 1 + r dollars
If the husband is given 2 dollars, then he will turn that into 2 + 2r dollars
If the husband is given 3 dollars, then he will turn that into 3 + 3r dollars
.
.
.
So, If the husband is given fT dollars, then he will turn that into fT + fTr dollars
They want to choose f such that the amount in the account at the end of the year is twice what they lived off this year. In terms of r, what should f be?
We want: (invested money) = 2(living expenses for 1 year)
Rewrite as: (fT + fTr) = 2(T - fT)
Expand right side: fT + fTr = 2T - 2fT
Divide both sides by T to get: f + fr = 2 - 2f
Add 2f to both sides: 3f + fr = 2
Factor right side: f(3 + r) = 2
Divide both sides by (3 + r) to get: f = 2/(3 + r)
Answer: D
Let \(S\) be salary, then \(f\cdot S\) was given to husband. They lived off of \((1-f)\cdot S\)BTGModeratorVI wrote: ↑Thu Aug 20, 2020 7:08 amThis year, a woman has a lucrative one-year position. During this year, she will give a fraction f of her salary to her husband, a private investor, to invest and they will live this year on the remainder. Through investments, her husband can turn each dollar she gives him into 1 + r, which will be deposited in a bank account. Their goal is to save & invest enough money so they can live off this money for two years following the end of the wife's position. Toward this end, they want to choose f such that the amount in the account at the end of the year is twice what they lived off this year. In terms of r, what should f be?
A. 1/(r+1)
B. 2/(r+2)
C. 2/(2r+1)
D. 2/(r+3)
E. 2/(2r+3)
Answer: D
Source: Magoosh
After investments, the account had \(f\cdot S\cdot (1+r)\)
Hence, as per question,
\(f\cdot S\cdot (1+r) = 2\cdot (1-f)\cdot S\)
\(\Rightarrow f + f\cdot r = 2 - 2\cdot f\)
\(\Rightarrow f(1+r+2) = 2\)
\(f = \dfrac{2}{(r+3)}\)
Therefore, D
GMAT/MBA Expert
- Scott@TargetTestPrep
- GMAT Instructor
- Posts: 7294
- Joined: Sat Apr 25, 2015 10:56 am
- Location: Los Angeles, CA
- Thanked: 43 times
- Followed by:29 members
Solution:BTGModeratorVI wrote: ↑Thu Aug 20, 2020 7:08 amThis year, a woman has a lucrative one-year position. During this year, she will give a fraction f of her salary to her husband, a private investor, to invest and they will live this year on the remainder. Through investments, her husband can turn each dollar she gives him into 1 + r, which will be deposited in a bank account. Their goal is to save & invest enough money so they can live off this money for two years following the end of the wife's position. Toward this end, they want to choose f such that the amount in the account at the end of the year is twice what they lived off this year. In terms of r, what should f be?
A. 1/(r+1)
B. 2/(r+2)
C. 2/(2r+1)
D. 2/(r+3)
E. 2/(2r+3)
Answer: D
Let the wife’s salary be x. Then, she gives xf to her husband and they live on x(1 - f) for the year. The husband will turn xf dollars into xf(1 + r) dollars. We want xf(1 + r) to be twice x(1 - f); thus:
xf(1 + r) = 2x(1 - f)
f(1 + r) = 2(1 - f)
f + rf = 2 - 2f
3f + rf = 2
f(3 + r) = 2
f = 2/(3 + r)
So, in terms of r, f should be chosen as 2/(r + 3).
Answer: D
Scott Woodbury-Stewart
Founder and CEO
[email protected]
![Image](https://www.beatthegmat.com/mba/uploads/images/partners/target_test_prep/TTPsig2022.png)
See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews
![Image](https://manticoreaudio.com/wp-content/uploads/2017/07/37px-email.png)
![Image](https://manticoreaudio.com/wp-content/uploads/2017/07/37px-linked.png)