An investment of d dollars....

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superduperman: Newbie | Next Rank: 10 Posts; Posts: 5; Joined: Tue Oct 14, 2008 6:41 pm

by superduperman » Thu Nov 20, 2008 9:17 pm

An investment of d dollars at k percent simple annual interest yields $600 interest over a 2-year period. In terms of d, what dollar amount invested at the same rate will yield $2400 interest over a 3-year period?

a. 2/3*d
b. 3/4*d
c. 4/3*d
d. 3/2*d
d. 8/3*d

Tough questions, anybody know how to solve?

Highlight for Answer: D

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Source: Beat The GMAT — Problem Solving | Thu Nov 20, 2008 9:17 pm

logitech: Legendary Member; Posts: 2134; Joined: Mon Oct 20, 2008 11:26 pmFollowed by: 25 members; Thanked: 237 times; GMAT Score:730

Re: An investment of d dollars....

by logitech » Thu Nov 20, 2008 9:36 pm

superduperman wrote:An investment of d dollars at k percent simple annual interest yields $600 interest over a 2-year period. In terms of d, what dollar amount invested at the same rate will yield $2400 interest over a 3-year period?

a. 2/3*d
b. 3/4*d
c. 4/3*d
d. 3/2*d
d. 8/3*d

Tough questions, anybody know how to solve?

Highlight for Answer: D

if you have 100 dollars and you invest it with 10% ineterest rate for 2 years:

Interest = 100 x (0.10) x 2 years = $ 20

Lets go back to question:

D x ( % rate ) x 2 = 600

X x (% rate ) x 3 = 2400

(% rate ) is the same so you can assume it as a constant

2DK=600 ; XK=2400

3XK = 4 x 600
3XK = 4 x ( 2DK)

X = 8DK/3K

X = 8D/3

LGTCH
---------------------
"DON'T LET ANYONE STEAL YOUR DREAM!"

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superduperman: Newbie | Next Rank: 10 Posts; Posts: 5; Joined: Tue Oct 14, 2008 6:41 pm

by superduperman » Thu Nov 20, 2008 9:41 pm

I guess not that tough, I kept trying to use FV=PV(1+k)^t

Thanks logitech

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Mozartain: Senior | Next Rank: 100 Posts; Posts: 49; Joined: Tue Nov 11, 2008 8:38 pm; Thanked: 3 times; GMAT Score:740

Simple interest

by Mozartain » Fri Nov 21, 2008 12:37 am

I attacked it this way:

Firstly, it's a simple interest problem - which makes things simple. $600 interest in 2 years means $300 in 1 year. Similarly, $2400 interest in 3 years means $800 in 1 year.

Now that we have 1 year's interest for both principals (known d and unknown x), we can set up the ratio:

d/300 = x/800
So, x=(8d)/3

Asif

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parallel_chase: Legendary Member; Posts: 1153; Joined: Wed Jun 20, 2007 6:21 amFollowed by: 2 members; Thanked: 146 times

by parallel_chase » Fri Nov 21, 2008 5:20 am

superduperman wrote:I guess not that tough, I kept trying to use FV=PV(1+k)^t

Thanks logitech

This is the formula for compounded interest. The question is about simple interest, which is (PV * Rate * Time)/100.

Hope this helps.

No rest for the Wicked....

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raunekk: Legendary Member; Posts: 1159; Joined: Wed Apr 16, 2008 10:35 pm; Thanked: 56 times

by raunekk » Fri Nov 21, 2008 9:33 am

i think ur mistake was that you were using compound interest formula

u will definately find it easy wit the simple interest formula
as parallel_chase has mentioned,,,

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