Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized for You

we will pick new questions that match your level based on your Timer History

Track Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

It appears that you are browsing the GMAT Club forum unregistered!

Signing up is free, quick, and confidential.
Join other 350,000 members and get the full benefits of GMAT Club

Registration gives you:

Tests

Take 11 tests and quizzes from GMAT Club and leading GMAT prep companies such as Manhattan GMAT,
Knewton, and others. All are free for GMAT Club members.

Applicant Stats

View detailed applicant stats such as GPA, GMAT score, work experience, location, application
status, and more

Books/Downloads

Download thousands of study notes,
question collections, GMAT Club’s
Grammar and Math books.
All are free!

Thank you for using the timer!
We noticed you are actually not timing your practice. Click the START button first next time you use the timer.
There are many benefits to timing your practice, including:

Alex deposited x dollars into a new account that earned 8 [#permalink]
23 Jan 2012, 12:12

1

This post received KUDOS

3

This post was BOOKMARKED

00:00

A

B

C

D

E

Difficulty:

35% (medium)

Question Stats:

72% (02:49) correct
28% (01:53) wrong based on 264 sessions

Alex deposited x dollars into a new account that earned 8 percent annual interest, compounded annually. One year later Alex deposited an additional x dollars into the account. If there were no other transactions and if the account contained w dollars at the end of two years, which of the following expresses x in terms of w ?

A. w/(1+1.08) B. w/(1.08+1.16) C. w/(1.16+1.24) D. w/(1.08+1.08^2) E. w/(1.08^2+1.08^2)

Re: Alex deposited x dollars into a new account [#permalink]
23 Jan 2012, 15:37

5

This post received KUDOS

Expert's post

Hi there! I'm happy to contribute to this one!

The question: Alex deposited x dollars into a new account that earned 8 percent annual interest, compounded annually. One year later Alex deposited an additional x dollars into the account. If there were no other transactions and if the account contained w dollars at the end of two years, which of the following expresses x in terms of w?

So first, Alex puts in x dollars.

One year goes by, and the x dollar accrues interest ---> x(1.08)

Then, Alex adds another x dollars --> x + x(1.08)

Then the second year goes by, and that whole amount gets multiplied by 1.08 ---> [x + x(1.08)]*(1.08) = x(1.08) + x(1.08)^2 = x[1.08 + (1.08)^2]

We are told this amount, the sum total after two years, equals w, so w = x[1.08 + (1.08)^2]

Dividing by the brackets to solve for x, we get x = w/(1.08 + (1.08)^2)

The answer choices as they appear in your post are technically incorrect, because they are lacking parentheses. If you underestimate the importance of parentheses, they will bite you in the butt over and over again on the real GMAT. Assuming the parentheses were in the right places, the answer would be

The key idea is: the x dollar amount that was in there for both years is multiplied twice by the multiplier. That's why there has to be a factor of (1.08)^2 floating around somewhere.

Does this make sense? Please let me know if you have any questions on what I've said.

Re: Alex deposited x dollars into a new account [#permalink]
23 Jan 2012, 17:38

2

This post received KUDOS

Expert's post

1

This post was BOOKMARKED

kajolnb wrote:

Alex deposited x dollars into a new account that earned 8 percent annual interest, compounded annually. One year later Alex deposited an additional x dollars into the account. If there were no other transactions and if the account contained w dollars at the end of two years, which of the following expresses x in terms of w ?

A. w/(1+1.08) B. w/(1.08+1.16) C. w/(1.16+1.24) D. w/(1.08+1.08^2) E. w/(1.08^2+1.08^2)

I thought as 1.08x+2x(1.08) = w

Account at the end of the first year would be 1.08x dollars. At this time x dollars was deposited, hence the account at the beginning of the second year would be (1.08x+x) dollars. Account at the end of the second year would be (1.08x+x)*1.08=w --> x(1.08^2+1.08)=w --> x=w/(1.08+1.08^2).

Re: Alex deposited x dollars into a new account that earned 8 [#permalink]
17 Sep 2013, 06:24

1

This post received KUDOS

Hello from the GMAT Club BumpBot!

Thanks to another GMAT 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. _________________

Re: Alex deposited x dollars into a new account [#permalink]
22 Sep 2013, 04:58

1

This post received KUDOS

Bunuel wrote:

kajolnb wrote:

Alex deposited x dollars into a new account that earned 8 percent annual interest, compounded annually. One year later Alex deposited an additional x dollars into the account. If there were no other transactions and if the account contained w dollars at the end of two years, which of the following expresses x in terms of w ?

A. w/(1+1.08) B. w/(1.08+1.16) C. w/(1.16+1.24) D. w/(1.08+1.08^2) E. w/(1.08^2+1.08^2)

I thought as 1.08x+2x(1.08) = w

Account at the end of the first year would be 1.08x dollars. At this time x dollars was deposited, hence the account at the beginning of the second year would be (1.08x+x) dollars. Account at the end of the second year would be (1.08x+x)*1.08=w --> x(1.08^2+1.08)=w --> x=w/(1.08+1.08^2).

Answer: D.

I did the math, 1.08x + x = 2.08x 2.08x * 1.08 = 2.2464 couldn't spot the answer after 2+ mins.

How are we supposed to know to leave (1.08x + x) in order to see the cube to 1.08^2 x?

Re: Alex deposited x dollars into a new account [#permalink]
22 Sep 2013, 05:07

1

This post received KUDOS

Expert's post

Skag55 wrote:

Bunuel wrote:

kajolnb wrote:

Alex deposited x dollars into a new account that earned 8 percent annual interest, compounded annually. One year later Alex deposited an additional x dollars into the account. If there were no other transactions and if the account contained w dollars at the end of two years, which of the following expresses x in terms of w ?

A. w/(1+1.08) B. w/(1.08+1.16) C. w/(1.16+1.24) D. w/(1.08+1.08^2) E. w/(1.08^2+1.08^2)

I thought as 1.08x+2x(1.08) = w

Account at the end of the first year would be 1.08x dollars. At this time x dollars was deposited, hence the account at the beginning of the second year would be (1.08x+x) dollars. Account at the end of the second year would be (1.08x+x)*1.08=w --> x(1.08^2+1.08)=w --> x=w/(1.08+1.08^2).

Answer: D.

I did the math, 1.08x + x = 2.08x 2.08x * 1.08 = 2.2464 couldn't spot the answer after 2+ mins.

How are we supposed to know to leave (1.08x + x) in order to see the cube to 1.08^2 x?

On the PS section always look at the answer choices before you start to solve a problem. They might often give you a clue on how to approach the question.

For this question this would give you a hint that you shouldn't calculate 1.08^2+1.08. _________________

Re: Alex deposited x dollars into a new account [#permalink]
05 Feb 2014, 01:45

Bunuel wrote:

kajolnb wrote:

Alex deposited x dollars into a new account that earned 8 percent annual interest, compounded annually. One year later Alex deposited an additional x dollars into the account. If there were no other transactions and if the account contained w dollars at the end of two years, which of the following expresses x in terms of w ?

A. w/(1+1.08) B. w/(1.08+1.16) C. w/(1.16+1.24) D. w/(1.08+1.08^2) E. w/(1.08^2+1.08^2)

I thought as 1.08x+2x(1.08) = w

Account at the end of the first year would be 1.08x dollars. At this time x dollars was deposited, hence the account at the beginning of the second year would be (1.08x+x) dollars. Account at the end of the second year would be (1.08x+x)*1.08=w --> x(1.08^2+1.08)=w --> x=w/(1.08+1.08^2).

Answer: D.

I did quick math (1.08)^2 = 1.16 and selected option B.

I know option D is more precise, but can GMAC give two option different only by third decimal digit (1.16 Vs 1.1664)?

Re: Alex deposited x dollars into a new account [#permalink]
05 Feb 2014, 10:11

Expert's post

idinuv wrote:

I did quick math (1.08)^2 = 1.16 and selected option B.

I know option D is more precise, but can GMAC give two option different only by third decimal digit (1.16 Vs 1.1664)?

Dear idinuv, I'm happy to respond. The short answer to your question is: "absolutely." Math is all about precision. Yes, in many Quant questions, GMAC spreads out the answer choices and allows for estimation and quick approximations, but that is not always the case. One way to think about it is that, for a pure mathematician, there is a continuous infinity of decimals between 1.16 and 1.1664 --- more decimals in that separation than the number of grains of sand it would take to fill the Universe. For a pure mathematician, there is just equal or completely unequal, and any inequality, no matter how small, is vast beyond all reckoning. Another perspective is what business people care about. Suppose, for the sake of argument, that x = $100,000,000 --- then, whether we divide by 1.16 or 1.1664 results in a difference of $437,014.52 : do you want that discrepancy to come out of your paycheck, because you were the person who rounded to two decimal places? Small decimal difference get very big in a hurry when one starts dealing with numbers in the millions & billions --- which values, of course, are typical in some industries. ------ Both the perspective of the pure mathematician and the perspective of big business are very important in informing the design of GMAT Quant questions, and from the point of view of both of these perspectives, the difference between 1.16 and 1.1664 could be tremendously important, not something to overlook. Does all this make sense? Mike _________________

Re: Alex deposited x dollars into a new account [#permalink]
05 Feb 2014, 10:48

mikemcgarry wrote:

idinuv wrote:

I did quick math (1.08)^2 = 1.16 and selected option B.

I know option D is more precise, but can GMAC give two option different only by third decimal digit (1.16 Vs 1.1664)?

Dear idinuv, I'm happy to respond. The short answer to your question is: "absolutely." Math is all about precision. Yes, in many Quant questions, GMAC spreads out the answer choices and allows for estimation and quick approximations, but that is not always the case. One way to think about it is that, for a pure mathematician, there is a continuous infinity of decimals between 1.16 and 1.1664 --- more decimals in that separation than the number of grains of sand it would take to fill the Universe. For a pure mathematician, there is just equal or completely unequal, and any inequality, no matter how small, is vast beyond all reckoning. Another perspective is what business people care about. Suppose, for the sake of argument, that x = $100,000,000 --- then, whether we divide by 1.16 or 1.1664 results in a difference of $437,014.52 : do you want that discrepancy to come out of your paycheck, because you were the person who rounded to two decimal places? Small decimal difference get very big in a hurry when one starts dealing with numbers in the millions & billions --- which values, of course, are typical in some industries. ------ Both the perspective of the pure mathematician and the perspective of big business are very important in informing the design of GMAT Quant questions, and from the point of view of both of these perspectives, the difference between 1.16 and 1.1664 could be tremendously important, not something to overlook. Does all this make sense? Mike

Thanks for your clear explanation Mike !

I totally concede with both the perspectives you have put-forth. My perspective about the design of incorrect answers has been that the incorrect answers generally are Partial answers, Wrong path answers, Simple manipulation answers etc. As suggested, I would now also lookout for 'Precision' based on the range of answer choices given.

Re: Alex deposited x dollars into a new account that earned 8 [#permalink]
08 Jul 2015, 09:48

Hello from the GMAT Club BumpBot!

Thanks to another GMAT 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. _________________

On September 6, 2015, I started my MBA journey at London Business School. I took some pictures on my way from the airport to school, and uploaded them on...

When I was growing up, I read a story about a piccolo player. A master orchestra conductor came to town and he decided to practice with the largest orchestra...

Last week, hundreds of first-year and second-year students traversed the globe as part of KWEST: Kellogg Worldwide Experience and Service Trip. Kyle Burr, one of the student-run KWEST executive...