Find all School-related info fast with the new School-Specific MBA Forum

It is currently 29 Jul 2014, 06:46

Close

GMAT Club Daily Prep

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.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Interest

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Manager
Manager
User avatar
Joined: 29 May 2008
Posts: 117
Followers: 1

Kudos [?]: 13 [0], given: 0

GMAT Tests User
Interest [#permalink] New post 28 Aug 2009, 05:55
00:00
A
B
C
D
E

Difficulty:

(N/A)

Question Stats:

100% (02:17) correct 0% (00:00) wrong based on 2 sessions
If Jaques deposists $1000 in a savings account at 10% simple annual interest, how much more will he earn than if he had deposited it in an account that pays 8 percent annueal interest compounded semiannually?

a) $20.00
b) $19.60
c) $18.40
d) $18.00
e) $17.40
Manager
Manager
avatar
Joined: 20 Aug 2009
Posts: 108
Followers: 2

Kudos [?]: 38 [0], given: 31

Re: Interest [#permalink] New post 28 Aug 2009, 06:54
1000(1+\frac{0.08}{2})^2-1000(1+0.1)
Manager
Manager
avatar
Affiliations: CFA Level 2 Candidate
Joined: 29 Jun 2009
Posts: 223
Schools: RD 2: Darden Class of 2012
Followers: 3

Kudos [?]: 42 [0], given: 2

GMAT Tests User
Re: Interest [#permalink] New post 28 Aug 2009, 08:26
With Deposit A he will earn 10% on 1,000 for 1 year = $100

With Deposit B he will earn 8/2 (Semi) 4% on $1,000 for 6 months = $40
And will earn 4% on $1,040 ($ are compounded) for 6 months = $41.60

$100.00 - $81.60 = $18.40
Manager
Manager
User avatar
Joined: 29 May 2008
Posts: 117
Followers: 1

Kudos [?]: 13 [0], given: 0

GMAT Tests User
Re: Interest [#permalink] New post 28 Aug 2009, 08:30
I have always problems with interests rates

Any suggestion to get better at it?

Thanks a lot
Manager
Manager
avatar
Affiliations: CFA Level 2 Candidate
Joined: 29 Jun 2009
Posts: 223
Schools: RD 2: Darden Class of 2012
Followers: 3

Kudos [?]: 42 [0], given: 2

GMAT Tests User
Re: Interest [#permalink] New post 28 Aug 2009, 08:51
It really depends on if you like to work it through step by step or an equation.

I prefer doing it the same way as Casper with the Present Value equation of FV=PV(1+\frac{I}{n})^n

Where i = Interest rate and N = # of periods compounded an PV = Initial Deposit

Once you get down the compounding these questions should become easy
Manager
Manager
avatar
Joined: 25 Aug 2009
Posts: 177
Followers: 1

Kudos [?]: 57 [0], given: 12

GMAT Tests User
Re: Interest [#permalink] New post 28 Aug 2009, 12:39
S.I = P*R*T/100 = 1000*10*1/100 = 100
Total amount = 1000 + 100 = 1100

C.I. = P(1+R/n)^Tn

= 1000*(1 + 8/200)^2 = 1000*(1.04)^2 = 1081.6

Remember, C.I formula gives total amount while S I formula gives only the interest.

Difference = 1100 - 1081.6 = 18.4
Re: Interest   [#permalink] 28 Aug 2009, 12:39
    Similar topics Author Replies Last post
Similar
Topics:
Interest bhandariavi 7 21 Mar 2011, 19:40
DS: Interest placid 7 20 Sep 2005, 23:55
interest mandy 8 17 Aug 2005, 13:30
For anyone interested wiseguy 4 13 May 2005, 05:26
Interesting Timer Zem 0 08 Feb 2005, 09:23
Display posts from previous: Sort by

Interest

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.