# GMAT Quant Practice | Simple Interest Q17

#### GMAT Sample Questions | Word Problem

The given question is a GMAT 550 level problem solving question from the topic Simple Interest. It tests the concept of finding principal invested based on data about interest earned.

Question 17: Ann invested a certain sum of money in a bank that paid simple interest. The amount grew to \$240 at the end of 2 years. She waited for another 3 years and got a final amount of \$300. What was the principal amount that she invested at the beginning?

1. \$200
2. \$150
3. \$210
4. \$175
5. Insufficient data

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### Explanatory Answer | GMAT Simple Interest

Concept: Simple interest earned remains same year after year.

At the end of 2 years:Value of investment (Amount) = \$240
At the end of another 3 years:Value of investment (Amount) = \$300
In 3 years, the sum grew by \$60.
So interest for 3 years = \$60.
Because Ann invested in simple interest, interest earned each year = \$20.

Interest earned in the first 2 years = 2 × 20 = \$40.
Therefore, principal = Sum at the end of 2 years - \$40 = \$240 - \$40 = \$200.
Principal invested \$200

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## Additional Practice Questions in Ratio Proportion, Mixtures, Percents, Fractions, Profits, and Interest

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