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$10,000 is deposited in a certain account that pays r

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Manager
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Joined: 28 Feb 2010
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WE 1: 3 (Mining Operations)
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$10,000 is deposited in a certain account that pays r [#permalink] New post 07 Jun 2010, 01:39
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A
B
C
D
E

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(N/A)

Question Stats:

0% (00:00) correct 100% (01:20) wrong based on 3 sessions
Q10:
$10,000 is deposited in a certain account that pays r percent annual interest compounded annually,
the amount D(t), in dollars, that the deposit will grow to in t years is given by D(t) = 10,000
{1+(r/100)}t. What amount will the deposit grow to in 3 years?
(1) D(t) = 11,000
(2) r =10
A. Statement (1) ALONE is sufficient, but statement (2) alone is not sufficient.
B. Statement (2) ALONE is sufficient, but statement (1) alone is not sufficient.
C. BOTH statements TOGETHER are sufficient, but NEITHER statement ALONE is
sufficient.
D. EACH statement ALONE is sufficient.
E. Statements (1) and (2) TOGETHER are NOT sufficient.

[Reveal] Spoiler:
Answer:D

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Manager
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Re: Compound Interest. [#permalink] New post 07 Jun 2010, 01:48
IMO B, because it directly gives the Rate of interest. However the OA is D, i.e A is also sufficient.

My doubt is we already have a function of D(t) defined in terms of r and t. Option A gives and alternate function D(t) independent of any r or t. In that case, the function D(t) assumes 11,000 value for all values of t, and hence is sufficient to ans the question.

But But But !!!!
Please see that we are already given the function in the question step. Should we consider the funtion in the option as TRUE !!!.....in that case...it contradicts....

The point came in my mind during solving the question but I stood beside B.... :roll:
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Re: Compound Interest. [#permalink] New post 07 Jun 2010, 09:21
praveenism wrote:
IMO B, because it directly gives the Rate of interest. However the OA is D, i.e A is also sufficient.

My doubt is we already have a function of D(t) defined in terms of r and t. Option A gives and alternate function D(t) independent of any r or t. In that case, the function D(t) assumes 11,000 value for all values of t, and hence is sufficient to ans the question.

But But But !!!!
Please see that we are already given the function in the question step. Should we consider the funtion in the option as TRUE !!!.....in that case...it contradicts....

The point came in my mind during solving the question but I stood beside B.... :roll:



I agree that the answer is B.

Statement 2 is obviously sufficient as it gives the rate of interest.

Statement 1 is not sufficient as it does not define t but tells us that the investment grew by 10%. This could mean that after the end of year 1, it grew by 10% which means that r is 10. However, it could also mean that at the end of year 2, the original investment is 11,000 which mean it grew at approximately 4.88% per year (used a calculator for this). So, this is clearly insufficient.

Unless a part of the question is missing (i.e. r must be an integer or D(1) instead of D(t) in statement 1), statement 1 is not sufficient.

Maybe I am missing something but that's my viewpoint.
Re: Compound Interest.   [#permalink] 07 Jun 2010, 09:21
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