The Compound Interest on an investment in 6 years is $400 and Compound Interest on the same investment in 12 years is $960. Find the initial investment.

Correct answer marked below

1250

1200

1000

Correct

1500

1100

You can see the correct answer above. Sign in for free to unlock the complete worked solution.

Get detailed analytics, unlock full explanations, and move up difficulty tiers as you practice.

Explanation

Preview

Official Explanation

Official

We're getting 960 - 800 = $160 interest on $400 in 6 years.

560 = 400(1 + r/100)^6

(1 + r/100)^6 = \frac{560}{400} = 1.4

…

Comments

Be the first to share your thoughts and help others understand it better.

What this question 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.

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