Home » GMAT » How much more should we invest annually if we want to gain 12% more per month with a new annual interest rate of 7.5% ?
An investment gained an interest payment of $250 each month when the annual interest rate was 8%, how much more should we invest annually if we want to gain 12% more per month with a new annual interest rate of 7.5% ?
A. $9,360
B. $9,100
C. $8,250
D. $7,300
E. $7,150
Correct Answer: D
Explanation/Reference:
Explanation:
The new monthly payment should be 1.12 x $250 = $280. Now we’ll proceed with the formula:
Principal × percent interest = interest earned
Solve for the principal for the 9% interest: (250 × 12)/.08= $37,500, this is what we invested before. Solve for the principal for the 6.5% interest: (280 × 12)/.075= $44,800, this is what we should invest with the new interest. (44800 37500 = $7,300) is the amount to be added to the prime payment.
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