GMAT Math : Interest Problems
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Example Questions
Example Question #111 : Word Problems
How much interest will be accumulated in a simple interest investment if 
$
$
$
$
$
Simple interest equation:
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?
None of the other answers are correct.
Example Question #12 : Interest Problems
How many years does it take an investment of 
Remember the simple interest formula, where I is interest, p is principle, r is rate, and t is time:
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?
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:
Example Question #14 : Interest Problems
We deposit today 
By applying the formula for simple interest rates, 
Example Question #14 : Calculating Simple Interest
If 
Here, we cannot apply the rate as is, since it is given for a year. We just have to divide the rate by the number of months in a year, since we are looking for a monthly rate. Therefore, the applicable rate is 
Example Question #13 : Interest Problems
A local credit union offers short-term loans at an annual interest rate of 
Here we need our simple interest formula. There is no compounding, so all we need is:
Plug in what we know and solve for 
So, Jasmine pays 
Example Question #13 : Interest Problems
We deposit 
This is a simple interest problem, therefore, the amount of interests received is given by the formula: 
Example Question #1 : Calculating Compound Interest
Grandpa Jack wants to help his grandson, Little Jack, with college expenses. Little Jack is currently 3 years old. If Grandpa Jack invests $5,000 in a college savings account earning 5% compounded yearly, how much money will he have in 15 years when Little Jack is 18?
Between $9,500-$10,000
Between $9,000-$9,500
Between $11,000-$11,500
Between $10,000-$10,500
Between $10,500-$11,000
Between $10,000-$10,500
To solve this, we can create an equation for the value based on time. So if we let t be the nmbers of years that have passed, we can create a function f(t) for the value in the savings account.
We note that f(0) =5000. (We invest 5000 at time 0.) Next year, he will have 5% more than that. To find our total value at the end of the year, we multiply 5,000 * 1.05 = 5,250. f(1) = 5000(1.05)=5,250. At the end of year 2, we will have a 5% growth rate. In other words, f(2) = (1.05)* f(1). We can rewrite this as 
Example Question #1 : Calculating Compound Interest
Cherry invested 
The monthly rate is
3 years = 36 months
According to the compound interest formula
and here 
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