An investment of d dollars at k percent simple annual interest yields $600 over a 2 year period. In terms of d, what dollar amount invested at the same rate will yield $24,000 over a 3 year period?

A. (2d)/3
B. (3d)/4
C. (4d)/3
D. (3d)/2
E. (8d)/3 - Correct Answer

Maybe Vics may work but I couldn't approach this correctly. How do you do this?

I suspect you may have a typo... can you double check on the amount you want to yield in the question... is it $24,000 or $2,400?

rey, you are correct. it's 2,400. sorry.

A VIC solution might look like this:

Choose d = 1000 and k = 30. I chose these numbers because $600 of simple interest over two years means $300 each year, and 30% of $1000 is $300.

So now, we need to find the target value, namely the size of the investment needed to yield $2400 in interest over three years, at the same rate k.

Interest = (Principal)(rate)(time)
2400 = P(.3)(3)
P=8000/3

Now, plugging in 1000 in for d in the five answer choices only gives one match, choice E.

Rey

Think that you need to generate 4 times as much interest , so multiply d by 4= 4d
However, you are given 3/2 as much time, so multiply 4d by 2/3 =8d/3

Kevin Armstrong
Madrid, Spain