$4800 becomes $6000 in 4 years at a certain rate of compound interest. What would have been the amount after 12 years?
Answer Choices
Correct answer marked belowSee the full step-by-step explanation
You can see the correct answer above. Sign in for free to unlock the complete worked solution.
Track your performance and improve
Get detailed analytics, unlock full explanations, and move up difficulty tiers as you practice.
Unlock the full explanation
Create a free account to reveal the correct answer, see the step-by-step explanation, and start tracking your GMAT progress.
Wait, can someone explain why we can just cube the ratio instead of doing the full compound interest formula? I got 9375 but that was after a lot of messy algebra, feels like I'm missing the elegant way.
Same here! Took me way too long with the formula before I realized the 4-year factor repeats three times over 12 years.
Yeah, the 12 years is exactly 3 chunks of 4 years, so the multiplier just compounds three times. Much cleaner.
Is this really 655-705? Took me a second to see the pattern but once you spot that 12 is 3 times 4, it's pretty quick.
I think the difficulty is in resisting the urge to set up the full equation. The structure is the trick.
Got 9375. The ratio 6000/4800 simplifies nicely which makes cubing it manageable by hand.
Nice, the simplification is the key — otherwise the numbers get ugly fast.
Quick note: don't forget the 12 years means the money is at 4-year-multiplied amount THREE times, not 2. Almost picked a smaller answer.
Classic trap. I nearly did the same until I counted the periods carefully.
What it tests
Your ability to compute percentage change, percentage of a whole, and to work backwards from a final value.
Common trap
Treating successive percentage changes as additive — a 10% rise then a 10% fall is not back to the start.