GMAT Math : Word Problems

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Example Questions

Example Question #6 : Interest Problems

How many years would it take Marissa to make $\$20,000$ in interest using a simple interest investment of $\$200,000$ in principal at 5% return?

Possible Answers:

$3\ years$

$4\ years$

$2\ years$

$5\ years$

Correct answer:

$2\ years$

Explanation:

Simple interest formula is: I=prt

Therefore, solving for the time factor:

$t= \frac{I}{pr}$

$t= \frac{20,000}{200,000*0.05}$

$t=2\ years$

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Example Question #5 : Calculating Simple Interest

Using the simple interest formula, what initial investment does Terry have to make to earn $\$30,000$ in interest if there is an $8\%$ return for years?

Possible Answers:

$\$90,000$

$\$85,000$

$\$80,000$

$\$75,000$

Correct answer:

$\$75,000$

Explanation:

Simple interest formula: I=prt

Therefore, solving for the principal factor in the equation:

$p=\frac{I}{rt}$

$p=\frac{30,000}{0.08*5}$

$p=\$75,000$

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Example Question #4 : Interest Problems

What return does Florence have to yield in order to make $\$10,000$ in interest off of a simple investment of $\$100,000$ for years?

Possible Answers:

$3.67\%$

$4\%$

$5\%$

$3.33\%$

Correct answer:

$3.33\%$

Explanation:

Simple interest formula: I=prt

Therefore, solving for the rate factor in the equation:

$r=\frac{I}{pt}$

$r=\frac{10,000}{100,000*3}$

$r=3.33\%$

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Example Question #3 : Calculating Simple Interest

Jesse has $\$500,000$ to invest for years for $6\%$ return. How much simple interest will his investment yield?

Possible Answers:

$\$800,000$

$\$1,000,000$

$\$700,000$

$\$900,000$

Correct answer:

$\$900,000$

Explanation:

Simple interest formula: I=prt

I= (500,000)*(0.06)*(30)

$I= \$900,000$

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Example Question #3 : Calculating Simple Interest

How many years would it take Julissa to make $\$35,000$ in interest using a simple interest investment of $\$70,000$ at a $13\%$ return?

Possible Answers:

$3.14\ years$

$3.5\ years$

$4.24\ years$

$3.85\ years$

Correct answer:

$3.85\ years$

Explanation:

Simple interest formula is: I=prt

Therefore, solving for the time factor:

$t=\frac{I}{pr}$

$t=\frac{35,000}{70,000*0.13}$

$t=3.85\ years$

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Example Question #111 : Word Problems

How much interest will be accumulated in a simple interest investment if $\$10,000$ is invested for years at $10\%$ interest rate?

Possible Answers:

$ 4,000

$ 7,000

$ $5000

$ 6000

Correct answer:

$ 6000

Explanation:

Simple interest equation:

I=prt

I=(10,000)(6)(0.10)

I=6000

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Example Question #11 : Interest Problems

Jessica deposits $5,000 in a savings account that collects 6% simple interest. How much money will she have accumulated after 5 years?

Possible Answers:

$\$6500$

$\$9000$

None of the other answers are correct.

$\$1500$

$\$8500$

Correct answer:

$\$6500$

Explanation:

A=p+prt

$A= accumulated\ sum;\ p=principle;\ r=rate;\ t=time\ in\ years$

A=5000+5000(0.06)5=6500

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Example Question #12 : Interest Problems

How many years does it take an investment of $\$$ 50000 to yield $\$$ 40000 in interest if invested at a $8\%$ simple interest rate?

Possible Answers:

$t= 10\: years$

$t= 1.5\: years$

$t= 8\: years$

$t=20\ years$

$t= 15\: years$

Correct answer:

$t= 10\: years$

Explanation:

Remember the simple interest formula, where I is interest, p is principle, r is rate, and t is time:

I=p*r*t

$t=\frac{I}{p*r}$

$t=\frac{40000}{50000*0.08}$

$t= 10\: years$

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Example Question #12 : Calculating Simple Interest

Bob lends $500 to his friend, who agrees to pay it back one month later with 5% simple interest. How much will Bob's friend owe him at the end of the month?

Possible Answers:

$\$575$

$\$550$

$\$505$

$\$510$

$\$525$

Correct answer:

$\$525$

Explanation:

At the end of one month, Bob's friend will owe him the $500, plus the 5% simple interest he agreed to pay. The total amount he owes Bob, then, will be $500 plus 5% of $500. This gives us:

$500+0.05(500)=500+\frac{1}{20}(500)=500+25=525$

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Example Question #14 : Interest Problems

We deposit today $\$175,000$ in an account paying $6\%$ simple interest every months. Assuming we make no other deposits, how much interests will we receive after 7.5 years?

Possible Answers:

$\$332,500$

$\$175,000$

$\$127,500$

$\$157,500$

$\$189,600$

Correct answer:

$\$157,500$

Explanation:

By applying the formula for simple interest rates, Pnr , where is the principal, the rate for the given period and is the number of periods we can easily get the amount of interests received. Our is 15, because the rate is given for 6 months. 7 years is equivalent to 14 times 6 months, to that we add the last half year and we get 15 periods. Therefore the amount of interest received is : $I= 175,000\cdot0.06\cdot15$ or 157,500 .

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GMAT Math : Word Problems

Study concepts, example questions & explanations for GMAT Math

All GMAT Math Resources

Example Questions

Example Question #6 : Interest Problems

Example Question #5 : Calculating Simple Interest

Example Question #4 : Interest Problems

Example Question #3 : Calculating Simple Interest

Example Question #3 : Calculating Simple Interest

Example Question #111 : Word Problems

Example Question #11 : Interest Problems

Example Question #12 : Interest Problems

Example Question #12 : Calculating Simple Interest

Example Question #14 : Interest Problems

All GMAT Math Resources

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