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GMAT Math : Simple and Compound Interest

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You may get one to two questions from Simple and Compound Interest in the GMAT quant section. The concepts tested include computing simple interest, compound interest, finding amount at the end of a period, computing amount invested at the beginning of a period. A collection of GMAT practice questions from simple and compound interest is given below. Attempt these questions and check whether you have got the correct answer. If you have not go to the explanatory answer or the video explanations (wherever provided) to learn how to crack the question.

  1. Braun invested a certain sum of money at 8% p.a. simple interest for 'n' years. At the end of 'n' years, Braun got back 4 times his original investment. What is the value of n?

    1. 50 years
    2. 25 years
    3. 12 years 6 months
    4. 37 years 6 months
    5. 40 years
    • Correct AnswerChoice (D).
      Braun invested for a period of 37 years and 6 months.
      Correct answer
    • Explanatory Answer
    • Simple Interest
    • Easy
  2. Shawn invested one half of his savings in a bond that paid simple interest for 2 years and received $550 as interest. He invested the remaining in a bond that paid compound interest, interest being compounded annually, for the same 2 years at the same rate of interest and received $605 as interest. What was the value of his total savings before investing in these two bonds?

    1. $5500
    2. $11000
    3. $22000
    4. $2750
    5. $44000
    • Correct AnswerChoice (D).
      The total value of his savings before investing was $2750.
      Correct answer
    • Explanatory Answer
    • Simple & Compound Interest
    • Medium
  3. Ann invested a certain sum of money in a bank that paid simple interest. The amount grew to $240 at the end of 2 years. She waited for another 3 years and got a final amount of $300. What was the principal amount that she invested at the beginning?

    1. $200
    2. $150
    3. $210
    4. $175
    5. Insufficient data
    • Correct AnswerChoice (A).
      Ann invested $200.
      Correct answer
    • Explanatory Answer
    • Simple Interest
    • Easy
  4. Peter invested a certain sum of money in a simple interest bond whose value grew to $300 at the end of 3 years and further to $400 at the end of another 5 years. What was the rate of interest in which he invested his sum?

    1. 12%
    2. 12.5%
    3. 6.67%
    4. 6.25%
    5. 8.33%
    • Correct AnswerChoice (E).
      The rate of interest was 8.33%.
      Correct answer
    • Explanatory Answer
    • Rate of simple interest
    • Easy
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