Q) After adding a simple interest of $ 270 an investment becomes $1395. If the principal was invested at 6% p.a. simple interest, for how long was the principal invested.

A) 3 Years

B) 4 Years

C) 5 Years

D) 6 Years

E) 7 Years

Solution: As a Simple Interest problem, this question would make use of the formula,

SI = Principal * Rate * Time

Amount = SI + Principal

Plugging in values, we get,

$1395 = $ 270 + Principal

Principal = $1395 - $270 => $1125

Using the formula to calculate time period, we get,

$270 = $1125*0.06*Time

=> Time = 4 years**Correct Answer: B**About the Author

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Categories : Interest Problems |

Simple interest and compound interest - essential topics for an MBA. GMAC thinks the same too. So you will find these questions randomly distributed in your GMAT Exam. |

Categories : Interest ProblemsOne of the topics commonly tested in the GMAT Quant section is that of Simple Interest. While the formulas and concepts applied herein are simple enough, a lot of test takers get caught up in the terminology surrounding the concepts and therefore get their answers on this topic wrong. Here, then, are the concepts on Simple Interest that you can get tested on when you take the GMAT, including the terminology: |