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Interest Yields

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Interest Yields

by oscardb2 » Sat Feb 28, 2009 7:09 am
Can you please show me how you would solve the following question?

An investment of D dollars at K percent simple annual interest yields $600 over a 2 year period. In terms of D, what dollar amount at the same rate will yield $2,400 over a 3 year period?

A. (2D)/3
B. (3D)/4
C. (4D)/3
D. (3D)/2
E. (8D)/3


Answer: E, (8D)/3
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by mygmat.2009 » Sat Feb 28, 2009 7:48 am
Rephrase text to equation:


"investment of D dollars at K percent simple annual interest yields $600 "
==> (DK/100)*2 = 600
==> K = 30000/D ... (equation : a)

"What dollar amount at the same rate will yield $2,400 over a 3 year period? "

==> (XK/100)*3 = 2400
==> X = 80000/K ... (equation : b)


To get X in terms of D, replace K ...

==> X = 80000/30000/D = 8D/3


Cheers,
Sam
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by krisraam » Sat Feb 28, 2009 8:25 am
D Dollars at the rate of K give 600 in 2 years in ineterest

D Dollars at the same rate of K give 300 in 1 year in interest

8D dollars at the same rate of k give 2400 in 1 year in interest.

8D/3 dollars at the same rate of k give 2400 in 3 years in interest.

Thanks
raama
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