Since he has $250 in his account in 2006 and $270 in 2008, it must be true that the amount of interest is $20 during these two years. Since it’s simple interest, it must mean that the amount of interest is $10 per year.

Therefore, in 2006, 5 years since 2001, the account must have accrued $50 in interest, which means the amount in 2001 is $200. So x = 200. Since 10/200 = 5/100 = 5%, y = 5. Therefore, x + y = 205.

Answer: D

With simple interest, the annual interest accrued is the SAME each year

We're told that in 2 years (from 2006 to 2008), the investment increases by $20 (from $250 to $270)
So, EACH YEAR, the investment increases by $10
There are 7 years from 2001 (the year of John's initial investment of x dollars) to 2008 (when John's investment reaches $270)
In those 7 years, John's ANNUAL interest is $10. So, the TOTAL interest accrued in 7 years = (7)($10) = $70

So, in 2001, John's initial investment = $270 - $70 = $200 So, x = 200

We now know that: John's initial investment = $200. The ANNUAL interest is $10.
10/200 = 5/100 = 5% So, the annual interest RATE = 5%. In other words, y = 5

So, x + y = 200 + 5 = 205

Answer: D

Hello from the GRE Prep Club BumpBot!

Thanks to another GRE Prep Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.