GMAT OFFICIAL GUIDE PS

Solution:

Although this question appears as if we may have to do a lot of calculating, we actually do not. Focus on the first sentence of the question stem. We are given that if money is invested at r percent interest, compounded annually, the amount of investment will double in approximately 70/r years.

We are then given that Pat’s parents invest $5,000 at 8 percent interest. It follows that the investment will double after 70/8 years, which is roughly 9 years. With an initial investment of $5,000, the investment will double to $10,000 in about 9 years. In another 9 years (a total of 18 years) the investment will double again to about $20,000.

Answer: A

About The Author

Scott Woodbury-Stewart is the founder & CEO of Target Test Prep. A passionate teacher who is deeply invested in the success of his students, Scott began his career teaching physics, chemistry, math, and biology. Since then, he has spent more than a decade helping students gain entry into the world’s top business schools, logging 10,000+ hours of GMAT, EA, GRE and SAT instruction. Scott also served as lead content developer and curriculum architect for the revolutionary courses Target Test Prep GMAT, Target Test Prep EA, Target Test Prep GRE and Target Test Prep SAT Quant.