Peter invested a certain sum of money in a si… | GMAT Sprint

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PS · Problem Solving

705-805

percent

Peter invested a certain sum of money in a simple interest bond whose value grew to $300 at the end of 3 years and to $400 at the end of another 5 years. What was the rate of interest in which he invested his sum?

Answer Choices

Correct answer marked below

6.25%

6 2/3%

8 1/3%

Correct

12%

12.5%

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Explanation

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Official Explanation

Official

Simple Interest = Principal * Rate * Years

Let

x

be the interest rate and

S

be the invested sum.

After 3 years:

3xS + S = 300

After another 5 years (total 8 years):

8xS + S = 400

Subtract the first equation from the second:

5xS = 100

So,

xS = 20

From the first equation:

S(3x + 1) = 300

…

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What this question tests

What it tests

Your ability to apply GMAT math concepts to solve a multi-step problem quickly and accurately. At the 705-805 level, accuracy and speed both matter.

Common trap

Overcomplicating the setup — most GMAT problems reward a direct, organized approach over brute calculation.