OG - PS - #128

[mww7786]

#128

If money is invested at r percent, compounded annually, the amount of the investment will double approximately (70/r) years. If Pat's parents invested $5000 in a long-term bond that pays 8%interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college?


a. 20000
b 15000
c 12000
d 10000
e 9000

d is correct

[Guest]

'a' is actually the correct answer, $20,000

[dbernst]

Though this problem is well-explained in the OG guide, it does highlight an important word: "approximate." On the GMAT, whenever the test writers use the words "approximate" or "approximately" they are in essence telling you NOT to solve explicitly. Instead, you will be able to ballpark and still always arrive at the correct answer. In this case, the $$$ doubles in approximately 70/8 years (i.e. every 9 years). Thus, the 5 Grand will turn to 10 Grand in 9 years, and then the 10 G's will double to 20 over the following 9 years.

The correct answer is A.