A Sequence Question or an Interest Question?

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Sometimes the concept being tested on the GMAT is not clear from the first read. A question that might look a little intimidating could be easier than it initially appears! Take, for example, this word problem:

Torres invested $P in a long term investment plan for 24 years at an interest compound annually. But due to some financial issues he had to withdraw money at the end of 6 years.How much more amount could he have gotten after 24 years if he received $3P after 6 years , if it’s known that there were no pre-closing charges or deductions in the plan?

A. 9P
B. 12P
C. 72P
D. 78P
E. 81P

This question is tricky at first since we don’t know the compounding interest rate, and feels like perhaps we would need a compound interest formula to solve, but let’s consider.

It started at P and then compounded 6 times and tripled itself to 3P. So this is more like a Geometric sequence question!

The rule is “P triples every 6 years.”

Year 1 – P
Year 6 – 3P
Year 12 – 9P
Year 18 – 27P
Year 24 – 81P

How much more means we subtract 3P from 81P:
81P-3P = 78P

The answer is (D). What is interesting is that we don’t need to know ANYTHING about interest to get this question correct!

The skill required is simply good scratch-work organization!