• Board contributors include instructors with "800" GMAT scores.
  • 95% of posts have replies within 24 hours.
  • Join for discounts with 800score, VeritasPrep and ManhattanGMAT


FAQ  - Register  - Search - Login 

All times are UTC - 7 hours




Post new topic Reply to topic  [ 2 posts ] 
Author Message
 Post subject: GMAT Percentage
PostPosted: Sat May 04, 2013 6:23 am 
Offline
User avatar

Joined: Tue Apr 13, 2010 8:48 am
Posts: 483
Which of the following represents the profit from the investment of x dollars at n percent compound annual interest for 3 years?
A. x(1 + 3n/100) – x
B. x(1 + n)³/100 – x
C. 3x(1 + n/100)² – x
D. x(1 + n/100)³ – x
E. x(1 + 3n/100)³ – x


(D) Compound interest is annually added to the principal sum. Therefore we can calculate the profit by deducting the original investment amount from the principal sum that we get in three years.

The principal sum increases by (1 + n/100) times each year. Therefore, in three years it increases by (1 + n/100)³ times. Since the original principal sum is x, then the profit is x(1 + n/100)³ – x. The correct answer is choice (D).
----------
I'm confused by your answer. You are told that the investment increases by n%, which is n/100. If we were told that the investment increases by n, then I can understand choosing D as the answer. But as we are already given n as a % (lets say n = 8%, so .08), why would we need to put it over 100 again, as in answer D?


Top
 Profile  
 
 Post subject: Re: GMAT Percentage
PostPosted: Sat May 04, 2013 6:24 am 
Offline
User avatar

Joined: Fri Apr 09, 2010 2:11 pm
Posts: 459
Quote:
You are told that the investment increases by n%, which is n/100.
That's exactly what we are told.
n% = n/100, not n% = n.
If n was 0.08, then n% would be (0.08)% = 0.08 × (1/100) = 0.0008


Plug in a value for n in the wording of the question to feel the difference:

"Which of the following represents the profit from the investment of x dollars at 10 percent compound annual interest for 3 years?"

vs.

"Which of the following represents the profit from the investment of x dollars at 10% percent compound annual interest for 3 years?", which is the same as

"Which of the following represents the profit from the investment of x dollars at 0.1 percent compound annual interest for 3 years?"


Top
 Profile  
 
Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 2 posts ] 

All times are UTC - 7 hours


Who is online

Users browsing this forum: Bing [Bot] and 1 guest


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot post attachments in this forum

Search for:
Jump to:  
cron
Powered by phpBB © 2000, 2002, 2005, 2007 phpBB Group
Template made by DEVPPL -
phpBB SEO
 
GMAT(TM) and GMAT CAT (TM) are registered trademarks of the Graduate Management Admission Council(TM). The Graduate Management Admission Council(TM) does not endorse, nor is affiliated in any way with the owner or any content of this site.