If $1000 is deposited in a bank account and remains in the

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If $1000 is deposited in a bank account and remains in the [#permalink]

01 Aug 2006, 09:49

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If $1000 is deposited in a bank account and remains in the account along with any accumulated interest, the dollar amount of interest, I, earned by deposit in first n years is given by formula I = 1000[(1+r/100)^n - 1], where r percent is annual interest rate paid by bank. Is the annual interest rate paid by bank greater than 8 percent ?

I. The deposit earns a total of $210 in interest in 1st 2 years.
II. (1+r/100)^2 > 1.15

I don't understand why the question can't be solved by II alone.

Thanks for your help.

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01 Aug 2006, 09:55

From the given equation

r = 100 x nth-root((I+1)/1000) - 100

S1: Sufficient to calculate, as I, n are given

S2:
Re-writing :

r > (sqrt(1.15) -1) x 100

r can be any value satisfying this equation. Multiple solutions. Not sufficient.

Answer: A

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01 Aug 2006, 10:01

A

St1: We get
210 = 1000[(1+r/100)^2 -1]
21/100 + 1= (1+r/100)^2
11/10 = 1+r/100
r = 10: SUFF

St2: (1+r/100)^2 > 1.15
i.e (1+r/100) > 1.07
i.e r > 7: INSUFF
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02 Aug 2006, 04:12

A

1)
210 = 1000[(1+r/100)^n -1]

1210 = 1000(1+r/100)^2
1.21 = (1+r/100)^2
1.1 = 1 + r/100
r = 10
Suff

2)
(1+r/100)^2 > 1.15
Lets say r = 7
(1+r/100)^2 = 1.151
Hence r > 7 Not suff

[#permalink] 02 Aug 2006, 04:12

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If $1000 is deposited in a bank account and remains in the

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