Last Updated on May 5, 2023
GMAT OFFICIAL GUIDE DS
Solution:
We need to determine which investment, J or K, provides a greater annual rate of return. That is, we are being asked whether J’s annual rate of return is greater than K’s annual rate of return.
Statement One Alone:
Type J returns $115 per $1,000 invested for any one-year period and type K returns $300 per $2,500 invested for any one-year period.
Statement one tells us the following:
Rate of return for investment J = 115/1,000 = 0.115 (since dividing by 1,000 means to move the decimal point three places to the left)
Rate of return for investment K = 300/2,500 = 3/25 = 12/100 = 0.12 (since dividing by 100 means to move the decimal point two places to the left)
We easily see that statement one provides us with the rate of return for both investments J and K. We see that K’s annual rate of return is greater that of J, so statement one is sufficient to answer the question. We can eliminate answer choices B, C, and E.
Statement Two Alone:
The annual rate of return for an investment of type K is 12 percent.
Because we do not have any information about the annual rate of return for investment J, statement two is not sufficient to answer the question.
Answer: A
