Tag Archives: Interest

SAT/ACT problem of the week, January 12, 2017 solution

Hint for process of elimination: This is considered a difficult problem to solve on the SAT directly, since the test makers don’t necessarily expect you to know logarithms. However, they do expect you to know the equation for percent growth, so you should have an equation to plug into. The equation is described below in the full solution.

Notice that the investment grows from $10,000 to $100,000, which is a tenfold increase in value of the investment. In this case, you might get a hint that the growth rate of the investment is pretty big. If the investment grows at a rate of 20% per year, then it takes less than 5 years for the value of the investment to double. That means it takes less than 15 years for the investment to double three times, which is a factor of 2^3 = 8. To grow by a factor of 10, it really should not take more than 15 years, at the roughest estimate. This leaves choices A (5 years), B (10 years), and C (12.6 years). Clearly 5 years is too short. After all, an investment that grows at 20% per year cannot grow 1000% in five years. This leaves choice B and C, giving you a 50% chance of getting the answer right. Even if you can’t decide on which answer is correct at this point, you should still give an answer.

Read on for a full solution.

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SAT/ACT problem of the week, January 12, 2017

A $10 thousand investment in a stock is expected to achieve a rate of return of 20% per year. At this rate, approximately how much time is expected to pass for the investment expected to be valued at $100 thousand?

  1. 5.0 years (check answer)
  2. 10.0 years (check answer)
  3. 12.6 years (check answer)
  4. 16.3 years (check answer)
  5. 50.0 years (check answer)

Have a solution? Hint? Question? Drop it below. We’d love to hear from you. A full solution will be posted on January 18th. If you would like to learn how to enter fancy math formulas into this blog, visit the WordPress LaTeX tutorial page.

SAT problem of the week, January 12, 2015 solution

Hint for process of elimination: This is considered a difficult problem to solve on the SAT directly, since the test makers don’t necessarily expect you to know logarithms. However, they do expect you to know the equation for percent growth, so you should have an equation to plug into. The equation is described below in the full solution.

Notice that the investment grows from $10,000 to $100,000, which is a tenfold increase in value of the investment. In this case, you might get a hint that the growth rate of the investment is pretty big. If the investment grows at a rate of 20% per year, then it takes less than 5 years for the value of the investment to double. That means it takes less than 15 years for the investment to double three times, which is a factor of 2^3 = 8. To grow by a factor of 10, it really should not take more than 15 years, at the roughest estimate. This leaves choices A (5 years), B (10 years), and C (12.6 years). Clearly 5 years is too short. After all, an investment that grows at 20% per year cannot grow 1000% in five years. This leaves choice B and C, giving you a 50% chance of getting the answer right. Even if you can’t decide on which answer is correct at this point, you should still give an answer.

Read on for a full solution.

Continue reading

SAT problem of the week, January 12, 2015

A $10 thousand investment in a stock is expected to achieve a rate of return of 20% per year. At this rate, approximately how much time is expected to pass for the investment expected to be valued at $100 thousand?

  1. 5.0 years (check answer)
  2. 10.0 years (check answer)
  3. 12.6 years (check answer)
  4. 16.3 years (check answer)
  5. 50.0 years (check answer)

Have a solution? Hint? Question? Drop it below. We’d love to hear from you. A full solution will be posted on January 18th. If you would like to learn how to enter fancy math formulas into this blog, visit the WordPress LaTeX tutorial page.