Money invested at x%, compounded annually, triples in value

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swerve: Legendary Member; Posts: 2604; Joined: Sun Oct 29, 2017 2:04 pmFollowed by: 6 members

by swerve » Mon May 21, 2018 10:15 am

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Money invested at x%, compounded annually, triples in value in approximately every 112/x years. if $25,000 is invested at a rate of 8%, compounded annually, what will be its approximate worth in 28 years?

A. $3,750
B. $5,600
C. $8,100
D. $15,000
E. $22,500

The OA is E.

Please, can anyone explain this PS question for me? I tried to solve it but I can't get the correct answer. I need your help. Thanks.

Source: Beat The GMAT — Problem Solving | Mon May 21, 2018 10:15 am

GMATGuruNY: GMAT Instructor; Posts: 15539; Joined: Tue May 25, 2010 12:04 pmFollowed by: 1906 members; Location: New York, NY; Thanked: 13060 times; GMAT Score:790

by GMATGuruNY » Mon May 21, 2018 10:31 am

The posted problem has a typo and should read as follows:

swerve wrote:Money invested at x%, compounded annually, triples in value in approximately every 112/x years. if $2500 is invested at a rate of 8%, compounded annually, what will be its approximate worth in 28 years?

A. $3,750
B. $5,600
C. $8,100
D. $15,000
E. $22,500

Since x=8, the approximate number of years for the investment to triple = 112/x = 112/8 = 14.
Since the initial investment = 2500, and the amount triples about every 14 years, we get:
After the first 14 years --> 3*2500 = 7500.
After the next 14 years --> 3*7500 = 22,500.

The correct answer is E.

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