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100 points for $49 worth of Veritas practice GMATs FREE VERITAS PRACTICE GMAT EXAMS Earn 10 Points Per Post Earn 10 Points Per Thanks Earn 10 Points Per Upvote ## Pat invested x dollars in a fund that paid 8 percent... tagged by: swerve ##### This topic has 2 expert replies and 0 member replies ### Top Member ## Pat invested x dollars in a fund that paid 8 percent... Pat invest x dollars in a fund that paid 8 percent annual interest, compounded annually. Which of the following represents the value, in dollars, of Pat's investment plus interest at the end of 5 years? $$A.\ 5\left(0.08x\right)$$ $$B.\ 5\left(1.08x\right)$$ $$C.\ \left(1+5\left(0.08x\right)\right)x$$ $$D.\ 1.08^5\cdot x$$ $$E.\ \left(1.08x\right)^5$$ The OA is D. Please, can any expert explain this PS question for me? I tried to solve it but I can't get the correct answer. I need your help. Thanks. ### GMAT/MBA Expert Legendary Member Joined 14 Jan 2015 Posted: 2667 messages Followed by: 122 members Upvotes: 1153 GMAT Score: 770 swerve wrote: Pat invest x dollars in a fund that paid 8 percent annual interest, compounded annually. Which of the following represents the value, in dollars, of Pat's investment plus interest at the end of 5 years? $$A.\ 5\left(0.08x\right)$$ $$B.\ 5\left(1.08x\right)$$ $$C.\ \left(1+5\left(0.08x\right)\right)x$$ $$D.\ 1.08^5\cdot x$$ $$E.\ \left(1.08x\right)^5$$ The OA is D. Please, can any expert explain this PS question for me? I tried to solve it but I can't get the correct answer. I need your help. Thanks. The compound interest formula: Total Value of Investment = P * (1 + r)^t P: Principal r: interest rate for period in question t: number of times compounded In this case: P = x r = .08 t = 5 Plug 'n chug: x * (1.08)^5. That's D _________________ Veritas Prep | GMAT Instructor Veritas Prep Reviews Save$100 off any live Veritas Prep GMAT Course

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### GMAT/MBA Expert

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swerve wrote:
Pat invest x dollars in a fund that paid 8 percent annual interest, compounded annually. Which of the following represents the value, in dollars, of Pat's investment plus interest at the end of 5 years?

$$A.\ 5\left(0.08x\right)$$
$$B.\ 5\left(1.08x\right)$$
$$C.\ \left(1+5\left(0.08x\right)\right)x$$
$$D.\ 1.08^5\cdot x$$
$$E.\ \left(1.08x\right)^5$$
We can use the compound interest formula A = P(1 + r/n)^(nt) to solve the problem.

Here, P = x, r = 0.08, n = 1, and t = 5. Therefore, the amount of her investment in 5 years will be:

A = x(1 + 0.08/1)^(1(5))

A = x(1.08)^5

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Scott Woodbury-Stewart
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scott@targettestprep.com

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