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Last year a certain bond with a face value of $5,000 yielded

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Last year a certain bond with a face value of $5,000 yielded

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Last year a certain bond with a face value of $5,000 yielded 8 percent of its face value in interest. If that interest was approximately 6.5 percent of the bond's selling price,approximately what was the bond's selling price?

A. $4,063
B. $5,325
C. $5,351
D. $6,000
E. $6,154

OA E

Source: GMAT Prep

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BTGmoderatorDC wrote:
Last year a certain bond with a face value of $5,000 yielded 8 percent of its face value in interest. If that interest was approximately 6.5 percent of the bond's selling price,approximately what was the bond's selling price?

A. $4,063
B. $5,325
C. $5,351
D. $6,000
E. $6,154

OA E

Source: GMAT Prep
We are given that a certain bond with a face value of $5,000 yielded 8% of its face value in interest. Thus, we can determine the interest as follows:

5,000 x 0.08 = 400

We also know that the $400 of interest was approximately 6.5% of the bond's selling price. Thus, we can create the following equation, where p = the bond’s selling price:

400 = 0.065 x p

400/0.065 = p

400,000/65 = p

6,154 ≈ p

Answer: E

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Scott Woodbury-Stewart
Founder and CEO
scott@targettestprep.com



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BTGmoderatorDC wrote:
Last year a certain bond with a face value of $5,000 yielded 8 percent of its face value in interest. If that interest was approximately 6.5 percent of the bond's selling price,approximately what was the bond's selling price?

A. $4,063
B. $5,325
C. $5,351
D. $6,000
E. $6,154
Last year a certain bond with a face value of $5,000 yielded 8 percent of its face value in interest
8% of $5,000 = $400
So, interest = $400

If that interest was approximately 6.5 percent of the bond's selling price,approximately what was the bond's selling price?
Let x = the bond's selling price
So, $400 = 6.5% of x
In other words: $400 = 0.065x
Solve: x = 400/0.065 ≈ 6154

Answer: E

Cheers,
Brent

_________________
Brent Hanneson – Creator of GMATPrepNow.com
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