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# If 1000 dollar is deposited in a certain bank account and

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VP
Joined: 22 Nov 2007
Posts: 1105
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If 1000 dollar is deposited in a certain bank account and [#permalink]  28 Dec 2007, 03:56
If 1000 dollar is deposited in a certain bank account and remains in the account alongo with any accumulated interest, the dollar amount of interest, I, earned by the deposit in the first n years is given by the formula I=1000[(1+r/100)^n - 1] where r percents is the annual inteerst rate paid by the bank. Is the annual interest rate paid by the bank greater than 8%?

1. the deposit earns a total of 210 dollar in interest in the first 2 years
2. (1+r/100)^2>1,15
Director
Joined: 12 Jul 2007
Posts: 865
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2
KUDOS
1. think of it logically. To earn 8% interest on \$1,000 for two years the interest would be

1000(.08) + (1000)(.08)+(80)(.08)
80+80+6.4=166.4

so if she earned \$210 in the first two years she must be making more than 8% interest.
SUFFICIENT

2. use the information we have from solving the problem since it's the same equation

1166.4/1000 = 1.664 which is greater than 1.15

but a number like 7.5% works as well

INSUFFICIENT

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