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by sukhman » Sat Mar 12, 2016 7:14 am
If the annual rate of income on an investment of $1500 was increased by 2 percent points and the amount of annual income was increased to $90 , then annual rate of income prior to the increase was
A) 3.5% B) 4% C) 4.5% D) 5% E) 6%
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by MartyMurray » Sat Mar 12, 2016 7:32 am
Translate the words into math.

The annual rate of income, r, was increased by two percentage points.

r + 2

When 1500 is multiplied by (r + 2)/100 the result is 90.

1500 x (r + 2)/100 = 90

15 x (r + 2) = 90

r + 2 = 6

r = 4

The correct answer is B.

Alternate Method

Try each answer choice, adding 2, dividing by 100 and multiplying by 1500, to see which generates a result of 90.

(A) 3.5 + 2 = 5.5 .055 x 1500 = 82.5

(B) 4 + 2 = 6 .06 x 1500 = 90

The correct answer is B.
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by [email protected] » Sat Mar 12, 2016 10:27 am
Hi sukhman,

This question can be solved by TESTing THE ANSWERS.

We're told that an invest = $1500 and that by raising the interest rate on that $1500 by 2 percentage points the interest would equal $90. We're asked for the ORIGINAL interest rate.

$1500 is a nice "round" number; 1% of $1500 = $15, so calculating any other percent of $1500 will be pretty straight-forward. Three of the answers are also nice round numbers, so let's start with....

Answer B: 4%

If the original interest was 4%, then the new interest = 4+2 = 6%

6% of $1500 = $90

This is an exact MATCH for what we were told, so this must be the answer.

Final Answer: B

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