Last year a certain bond with a face value of $5000 yielded 8% of its value in interest. If that interest was approximately 6.5% of the bond's selling price, approximately what was the bond's selling price?
A - $4063
B - $5323
C - $5351
D - $6000
E - $6154
E
I am sure I am missing a simple step here. Thanks for the help!
Interest Rate Word Problem
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- shovan85
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Last year a certain bond with a face value of $5000 yielded 8% of its value in interest.jk2010 wrote:Last year a certain bond with a face value of $5000 yielded 8% of its value in interest. If that interest was approximately 6.5% of the bond's selling price, approximately what was the bond's selling price?
A - $4063
B - $5323
C - $5351
D - $6000
E - $6154
E
I am sure I am missing a simple step here. Thanks for the help!
So the yielded interest was = 8% of 5000 = 400
This $400 is 6.5% of selling price.
Thus the 100% is the selling price = (400/6.5) * 100 = 6153.8
Approximately 6154
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Interest = .08*5000 = 400.jk2010 wrote:Last year a certain bond with a face value of $5000 yielded 8% of its value in interest. If that interest was approximately 6.5% of the bond's selling price, approximately what was the bond's selling price?
A - $4063
B - $5323
C - $5351
D - $6000
E - $6154
E
I am sure I am missing a simple step here. Thanks for the help!
Now let's find 6.5% of the answer choices -- which represent the selling price -- to see which answer choice yields 400.
Let's start with D, since it's a round number:
.065*6000 = 390.
Not quite 400. The selling price has to be just a bit larger.
The correct answer is E.
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- melguy
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GMATGuruNY wrote:jk2010 wrote:Last year a certain bond with a face value of $5000 yielded 8% of its value in interest. If that interest was approximately 6.5% of the bond's selling price, approximately what was the bond's selling price?
A - $4063
B - $5323
C - $5351
D - $6000
E - $6154
E
I am sure I am missing a simple step here. Thanks for the help!
Interest = .08*5000 = 400.
Now let's find 6.5% of the answer choices -- which represent the selling price -- to see which answer choice yields 400.
Let's start with D, since it's a round number:
.065*6000 = 390.
Not quite 400. The selling price has to be just a bit larger.
The correct answer is E.
Thanks GMATGuru.
Since this question has so many approximately I thought 390 is "approximately" 400. So I picked D instead of E.
Hi GMATGuruNY ,
Interest = .08*5000 = 400.
Now let's find 6.5% of the answer choices -- which represent the selling price -- to see which answer choice yields 400.
Let's start with D, since it's a round number:
.065*6000 = 390.
Not quite 400. The selling price has to be just a bit larger
The correct answer is E.
Can you please explain with the algebraic approach?
Many thanks in advance.
Kavin
- fiza gupta
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Amount= 5000
rate = 8%
interest = 5000*.08 = 400
interest is 6.5% of SP
400 = 6.5% of s.p
400 = .065*sp
=6153.8
SO E
rate = 8%
interest = 5000*.08 = 400
interest is 6.5% of SP
400 = 6.5% of s.p
400 = .065*sp
=6153.8
SO E
Fiza Gupta
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8% interest on the $5000 bond = (8/100)(5000) = 400.Needgmat wrote:
Hi GMATGuruNY ,
Can you please explain with the algebraic approach?
Many thanks in advance.
Kavin
Since this value is equal to approximately 6.5% of the selling price, we get:
400 = (6.5/100)x
400 = (13/200)x
x = 80000/13 = more than 6100.
The correct answer is E.
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jk2010 wrote:Last year a certain bond with a face value of $5000 yielded 8% of its value in interest. If that interest was approximately 6.5% of the bond's selling price, approximately what was the bond's selling price?
A - $4063
B - $5323
C - $5351
D - $6000
E - $6154
E
We are given that a certain bond with a face value of $5,000 yielded 8% of its face value in interest. Thus, we can determine the interest as follows:
5,000 x 0.08 = 400
We also know that the $400 of interest was approximately 6.5% of the bond's selling price. Thus, we can create the following equation, where p = the bond's selling price:
400 = 0.065 x p
400/0.065 = p
400,000/65 = p
6,154 ≈ p
Answer: E
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