If $5,000 invested for one year at p percent simple interest yields $500, what amount must be invested at k percent simple annual interest for one year to yield the same number of dollars?
1. K=0.8p
2. K=8
Answer: D
Please explain reasoning.
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- MartyMurray
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The question is asking what amount has to be invested at rate of interest k in order to generate $500 in interest. Since if we know what k is we will be able to determine the amount needed to generate $500 in interest, the question can be rephrased as "What is the value of k?"If $5,000 invested for one year at p percent simple interest yields $500, what amount must be invested at k percent simple annual interest for one year to yield the same number of dollars?
1. k = 0.8p
2. k = 8
Statement 1 tells us the relationship between k and p. Since we can calculate that p = 10 from the fact that $5000 x p% = $500, using the information given in Statement 1 we can also calculate k.
Sufficient.
Statement 2 answers our rephrased question exactly.
Sufficient.
The correct answer is D.
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- Brent@GMATPrepNow
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The great thing about DS questions is that we aren't required to perform calculations if we know that we COULD perform those calculations. Here's what I mean:If $5000 invested for one year at p percent simple annual interest yields $500,what amount must be invested at k percent simple annual interest for one year to yield the same amount of dollars ?
1) k = 0.8p
2) k = 8
Target question: What amount must be invested at k percent simple annual interest for one year to yield the same amount of dollars ?
Given: If $5000 invested for one year at p percent simple annual interest yields $500
IMPORTANT: There's ONLY ONE possible value of p that will yield $500 interest after 1 year (if $5000 is invested). So, we COULD perform some calculations to determine that ONE VALUE of p.
Statement 1: k = 0.8p
Since we COULD determine the value of p, we COULD also determine the value of k Using the fact that k = 0.8p).
Once we know the ONE value of k, we COULD determine how much money needs to be invested to get $500 in interest after 1 year.
Since we can answer the target question with certainty, statement 1 is SUFFICIENT
Statement 2: k = 8
Perfect!
Once we know the value of k, we COULD determine how much money needs to be invested to get $500 in interest after 1 year.
Since we can answer the target question with certainty, statement 2 is SUFFICIENT
Answer = D
Cheers,
Brent
Brent@GMATPrepNow wrote:The great thing about DS questions is that we aren't required to perform calculations if we know that we COULD perform those calculations. Here's what I mean:If $5000 invested for one year at p percent simple annual interest yields $500,what amount must be invested at k percent simple annual interest for one year to yield the same amount of dollars ?
1) k = 0.8p
2) k = 8
Target question: What amount must be invested at k percent simple annual interest for one year to yield the same amount of dollars ?
Given: If $5000 invested for one year at p percent simple annual interest yields $500
IMPORTANT: There's ONLY ONE possible value of p that will yield $500 interest after 1 year (if $5000 is invested). So, we COULD perform some calculations to determine that ONE VALUE of p.
Statement 1: k = 0.8p
Since we COULD determine the value of p, we COULD also determine the value of k Using the fact that k = 0.8p).
Once we know the ONE value of k, we COULD determine how much money needs to be invested to get $500 in interest after 1 year.
Since we can answer the target question with certainty, statement 1 is SUFFICIENT
Statement 2: k = 8
Perfect!
Once we know the value of k, we COULD determine how much money needs to be invested to get $500 in interest after 1 year.
Since we can answer the target question with certainty, statement 2 is SUFFICIENT
Answer = D
Cheers,
Brent
So the answer did not have to yield $500 after computing? I thought the question was that it must equal $500 so I decided Statement 1 was insufficient because of the .08