Roger's hedge fund is taking x dollars and investing in bonds that yield r percent in simple interest. The amount of interest earned over 2 years is $1000. In terms of $x$ , the dollar amount invested, what dollar amount invested will yield $4000 over 5 years, assuming the bond's yield remains the same?

Correct answer marked below

x

2x/3

2x

4x/3

8x/5

Correct

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What this question tests

Your ability to compute percentage change, percentage of a whole, and to work backwards from a final value.

Treating successive percentage changes as additive — a 10% rise then a 10% fall is not back to the start.