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If money is invested at r percent interest, compounded annually,

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If money is invested at r percent interest, compounded annually,

by BTGModeratorVI » Mon Sep 14, 2020 8:38 am

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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

Answer: A
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Re: If money is invested at r percent interest, compounded annually,

by Brent@GMATPrepNow » Sat Sep 19, 2020 6:04 am
BTGModeratorVI wrote: ↑
Mon Sep 14, 2020 8:38 am
 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

Answer: A
Source: Official guide
GIVEN: At r percent interest, the amount of the investment will double in approximately 70/r years
So, at 8 percent interest, the time for the investment to double = 70/8 ≈ 9
So, the investment will double every 9 years

We can now create a growth table:
Initially, the investment is worth $5,000
After 9 years, the investment is worth $10,000
After 18 years, the investment is worth $20,000

Answer: A

Cheers,
Brent
Brent Hanneson - Creator of GMATPrepNow.com
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