An investment of d dollars at k percent simple annual interest yields $600 interest over a 2 yr period. In terms of d, what dollar amount invested at the same rate will yield $2,400 interest over a 3 yr period?
a. 2d/3
b. 3d/4
c. 4d/3
d. 3d/2
e. 8d/3
Answer E
please please help...i am lost
GMAT Prep - Interest problem
This topic has expert replies
- Neo2000
- Legendary Member
- Posts: 519
- Joined: Sat Jan 27, 2007 7:56 am
- Location: India
- Thanked: 31 times
Simple interest is calculated on the interest every year. So, if the interest at the end of 2yrs is $600 then interest at the end of 1year is 300
The formula for s.i for 1 year is (dxkx1)/100 and this = 300 (1)
Now need new D such that (Dxkx1)/100 = 800 (again, si for 3yrs = 2400, therefore for 1yr = 800) (2)
From (1) we get k = 30,000/D
Substitute this in (2)
The formula for s.i for 1 year is (dxkx1)/100 and this = 300 (1)
Now need new D such that (Dxkx1)/100 = 800 (again, si for 3yrs = 2400, therefore for 1yr = 800) (2)
From (1) we get k = 30,000/D
Substitute this in (2)
- Stuart@KaplanGMAT
- GMAT Instructor
- Posts: 3225
- Joined: Tue Jan 08, 2008 2:40 pm
- Location: Toronto
- Thanked: 1710 times
- Followed by:614 members
- GMAT Score:800
I'd pick numbers on this question.bbuisson wrote:An investment of d dollars at k percent simple annual interest yields $600 interest over a 2 yr period. In terms of d, what dollar amount invested at the same rate will yield $2,400 interest over a 3 yr period?
a. 2d/3
b. 3d/4
c. 4d/3
d. 3d/2
e. 8d/3
Answer E
please please help...i am lost
We know that we get $600 simple interest over 2 years, which means $300 interest per year.
So, let's pick:
principal (d) = 1000
interest rate (k) = 30%
Now, let's look at the rest of the question. We want to determine what amount of principal at 30% simple interest will give us $2400 interest over a 3 year period, or to convert to an annual basis, $800 per year.
So, 30%(principal) = 800
(3/10)p = 800
p = 800(10/3) = 8000/3
(note: no need to reduce further, since the answers are all expressed as fractions)
Now, let's plug our d value (1000) into the answers until we get a match.
We can quickly narrow it down to (a), (c) and (e) based on the denominator 3.
(a) 2d/3 = 2000/3
(c) 4d/3 = 4000/3
(e) 8d/3 = 8000/3 - BINGO! Choose (e).
Stuart Kovinsky | Kaplan GMAT Faculty | Toronto
Kaplan Exclusive: The Official Test Day Experience | Ready to Take a Free Practice Test? | Kaplan/Beat the GMAT Member Discount
BTG100 for $100 off a full course
-
- Junior | Next Rank: 30 Posts
- Posts: 10
- Joined: Tue Nov 04, 2008 1:25 pm
we have a simple annual interest yields $600 interest over a 2 yr period ( not compounded), so we can break it down at $300 for the first year and $300 for the second year.
also, we can give name to the animals; if is $300 in each year, so d can be $3,000 and k= 10%, so 3,000 x 0.10= 300.
The question is " what dollar amount invested at the same rate will yield $ 2,400 interest over a 3 year".
Using 8d/3, we're going to have 8 x 3,000/3 = $ 8,000; now 8,000 at the same rate, $8,000 x 10%= $8,000 x 0.10 = $800 per year, in 3 years it will be 2,400.
Good question
also, we can give name to the animals; if is $300 in each year, so d can be $3,000 and k= 10%, so 3,000 x 0.10= 300.
The question is " what dollar amount invested at the same rate will yield $ 2,400 interest over a 3 year".
Using 8d/3, we're going to have 8 x 3,000/3 = $ 8,000; now 8,000 at the same rate, $8,000 x 10%= $8,000 x 0.10 = $800 per year, in 3 years it will be 2,400.
Good question
-
- Legendary Member
- Posts: 2467
- Joined: Thu Aug 28, 2008 6:14 pm
- Thanked: 331 times
- Followed by:11 members
Picking numbers is a good way like Stuart said.
If u dont feel comfortable with picking numbers use the formula for simple interest
Put this on your flashcard(comes in handy even in DataSufficiency problem wiht simple interest):
SI = P*N*R /100
where p-principal n- number of years r-rate
SI- SIMPLE INTEREST
GIVEN:
600 = d * 2 * k/100
kd = 600*50 (1)
Lets say x is the principal we need to find in terms of d
2400 = x * 3 *k/100
x = 2400 *100/3k
= 2400 * 100 * d / 3 * 600 *50 (from (1) k = 600*50/d)
8d/3
If u dont feel comfortable with picking numbers use the formula for simple interest
Put this on your flashcard(comes in handy even in DataSufficiency problem wiht simple interest):
SI = P*N*R /100
where p-principal n- number of years r-rate
SI- SIMPLE INTEREST
GIVEN:
600 = d * 2 * k/100
kd = 600*50 (1)
Lets say x is the principal we need to find in terms of d
2400 = x * 3 *k/100
x = 2400 *100/3k
= 2400 * 100 * d / 3 * 600 *50 (from (1) k = 600*50/d)
8d/3
Could somebody explain this question again in simpler terms? I'm familiar with simple and compound interest, but I can not wrap my brain around any of these explanations as I find them hard to follow. I'm not a fan of these "In Terms of: questions as they get me all the time, even when i plug in numbers.
- dumb.doofus
- Master | Next Rank: 500 Posts
- Posts: 435
- Joined: Sat Sep 27, 2008 2:02 pm
- Location: San Jose, CA
- Thanked: 43 times
- Followed by:1 members
- GMAT Score:720
I would say check the explanation given by cramya again.. it doesnt' get simpler than that..vitapup wrote:Could somebody explain this question again in simpler terms? I'm familiar with simple and compound interest, but I can not wrap my brain around any of these explanations as I find them hard to follow. I'm not a fan of these "In Terms of: questions as they get me all the time, even when i plug in numbers.
One love, one blood, one life. You got to do what you should.
https://dreambigdreamhigh.blocked/
https://gmattoughies.blocked/
https://dreambigdreamhigh.blocked/
https://gmattoughies.blocked/
- vineetbatra
- Master | Next Rank: 500 Posts
- Posts: 355
- Joined: Thu Feb 19, 2009 12:42 pm
- Thanked: 2 times
- Followed by:1 members
I would put it this way.
If interst for 2 years is 600 then interest for 3 years is 900 for d dollars.
now if I want interest of 2400 I need to increase d i.e. the principal, much it is d *2400/900. d8/3.
If interst for 2 years is 600 then interest for 3 years is 900 for d dollars.
now if I want interest of 2400 I need to increase d i.e. the principal, much it is d *2400/900. d8/3.
-
- Master | Next Rank: 500 Posts
- Posts: 179
- Joined: Tue Jan 08, 2008 7:23 pm
- Thanked: 11 times
- GMAT Score:590
lets try another short cut
600 to become 2400
so you need 4 times the Initial Capital(As rate is unchanged)
Now Duration wise you get 1.5 times(from 2 to 3 yrs)
hence you need 4/1.5 times the Initial Capital
thats 40/15 = 8/3
600 to become 2400
so you need 4 times the Initial Capital(As rate is unchanged)
Now Duration wise you get 1.5 times(from 2 to 3 yrs)
hence you need 4/1.5 times the Initial Capital
thats 40/15 = 8/3
bbuisson wrote:An investment of d dollars at k percent simple annual interest yields $600 interest over a 2 yr period. In terms of d, what dollar amount invested at the same rate will yield $2,400 interest over a 3 yr period?
a. 2d/3
b. 3d/4
c. 4d/3
d. 3d/2
e. 8d/3
Answer E
please please help...i am lost
-
- Master | Next Rank: 500 Posts
- Posts: 148
- Joined: Wed Jun 03, 2009 8:04 pm
- Thanked: 18 times
- Followed by:1 members
This is a very simple question
One thing to remember , Its Simple Interest = Simple problem
We know that the interest is proportional to the amount invested if the rate is constant (SI)
So that solves the problem for 2 years we get 600 , then per year we must get 300 that is @ k% interest
So if we want to get 2400 for 3 years @ K% , we need to get 800 per year
But we know that if we invest $d we get 300 , hence we have to invest
800*d/300 or 8d/3
This is so easy because we are dealing with SI and the interest rate doesn't change for the 2 situations
So Interest is proportional to the Money invested
Mathematically we can write I = kM for some positive integer k
Then I(1) = KM(1) and I(2) = KM(2)
Then I(1)/I(2) = M(1)/M(2) or I(1)M(2) = I(2)M(1)
But all the calculation is unnecessary if one understand the main point expressed above
I don't know why we have to substitute numbers , its simple test of a concept ...............if you understand the concept the answer is so easy to pick
One thing to remember , Its Simple Interest = Simple problem
We know that the interest is proportional to the amount invested if the rate is constant (SI)
So that solves the problem for 2 years we get 600 , then per year we must get 300 that is @ k% interest
So if we want to get 2400 for 3 years @ K% , we need to get 800 per year
But we know that if we invest $d we get 300 , hence we have to invest
800*d/300 or 8d/3
This is so easy because we are dealing with SI and the interest rate doesn't change for the 2 situations
So Interest is proportional to the Money invested
Mathematically we can write I = kM for some positive integer k
Then I(1) = KM(1) and I(2) = KM(2)
Then I(1)/I(2) = M(1)/M(2) or I(1)M(2) = I(2)M(1)
But all the calculation is unnecessary if one understand the main point expressed above
I don't know why we have to substitute numbers , its simple test of a concept ...............if you understand the concept the answer is so easy to pick
-
- Master | Next Rank: 500 Posts
- Posts: 198
- Joined: Tue Feb 12, 2008 10:16 am
- Location: San Francisco
- Thanked: 14 times
Thanks for the simple and meaningful explanation.vineetbatra wrote:I would put it this way.
If interst for 2 years is 600 then interest for 3 years is 900 for d dollars.
now if I want interest of 2400 I need to increase d i.e. the principal, much it is d *2400/900. d8/3.
-
- Master | Next Rank: 500 Posts
- Posts: 392
- Joined: Thu Jan 15, 2009 12:52 pm
- Location: New Jersey
- Thanked: 76 times
-
- Master | Next Rank: 500 Posts
- Posts: 197
- Joined: Sun May 18, 2008 2:47 am
- Thanked: 12 times
600=d1(k/100)2bbuisson wrote:An investment of d dollars at k percent simple annual interest yields $600 interest over a 2 yr period. In terms of d, what dollar amount invested at the same rate will yield $2,400 interest over a 3 yr period?
a. 2d/3
b. 3d/4
c. 4d/3
d. 3d/2
e. 8d/3
Answer E
please please help...i am lost
2400=d2(k/100)3
problem says same rate so solve for k/100 at d1 investment then plug into simple interest equation to get d2.
300/d1=k/100
therefore
2400=d2(300/d1)3
d2=8d1/3
answer 3
-
- Senior | Next Rank: 100 Posts
- Posts: 31
- Joined: Tue Sep 29, 2009 2:03 pm
I went for a simpler one
I = P*r* t
Therfore
1) 600 = d*k*2
and for assuming x times of d
2) 2400 = (xd)*k*3
Divide one with other
4 = x3/2
x=8/3
and hence 8/3d
I = P*r* t
Therfore
1) 600 = d*k*2
and for assuming x times of d
2) 2400 = (xd)*k*3
Divide one with other
4 = x3/2
x=8/3
and hence 8/3d