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# Jill invests $10000 in an account that pays an annual rate  Question banks Downloads My Bookmarks Reviews Important topics Author Message TAGS: Magoosh GMAT Instructor Joined: 28 Dec 2011 Posts: 2791 Followers: 947 Kudos [?]: 3974 [3] , given: 44 Jill invests$10000 in an account that pays an annual rate [#permalink]  24 Jan 2013, 17:09
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Difficulty:

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Question Stats:

70% (02:15) correct 30% (01:41) wrong based on 160 sessions
Jill invests $10000 in an account that pays an annual rate of 3.96%, compounding semi-annually. Approximately how much does she have in her account after two years? (A)$10079.44
(B) $10815.83 (C)$12652.61
(D) $14232.14 (E)$20598.11

On the GMAT, you are not allowed to use a calculator, and yet the test can give you problems like this. It is so important to learn estimation skills that allow you to dispatch questions like this with simple arithmetic. For a full discussion of estimation strategies, as well as an analysis of this question, see:
http://magoosh.com/gmat/2012/the-power- ... mat-quant/

Mike
[Reveal] Spoiler: OA

_________________

Mike McGarry
Magoosh Test Prep

Last edited by Bunuel on 25 Jan 2013, 04:24, edited 1 time in total.
RENAMED THE TOPIC.
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Manager
Joined: 23 Jan 2013
Posts: 173
Concentration: Technology, Other
Schools: Haas
GMAT Date: 01-14-2015
WE: Information Technology (Computer Software)
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Kudos [?]: 33 [1] , given: 41

Re: Jill invests $10000 in an account that pays an annual rate [#permalink] 25 Jan 2013, 09:15 1 This post received KUDOS amount = principal * ( 1+ r/n) ^nt Intern Joined: 27 Dec 2012 Posts: 12 Followers: 0 Kudos [?]: 3 [3] , given: 4 Re: Jill invests$10000 in an account that pays an annual rate [#permalink]  27 Jan 2013, 09:28
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Very Simple question (I mean the options are very helpful)..

Let us consider interest rate as 4%. Therefore, in 6 months, the investment earns 200 dollars..

similarly...in next 6 months something more than 200 dollars...

therefore, in 2 years...10815 is the return..
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Joined: 12 Jan 2013
Posts: 58
Location: United States (NY)
GMAT 1: 780 Q51 V47
GPA: 3.89
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Kudos [?]: 60 [1] , given: 13

Re: Jill invests $10000 in an account that pays an annual rate [#permalink] 29 Jan 2013, 22:49 1 This post received KUDOS rohitgupta86 wrote: Very Simple question (I mean the options are very helpful).. Exactly! Forget the "semi-annually". 4% per year means 8% for two years. Answer B. _________________ Sergey Orshanskiy, Ph.D. I tutor in NYC: http://www.wyzant.com/Tutors/NY/New-Yor ... ref=1RKFOZ Current Student Joined: 06 Sep 2013 Posts: 2036 Concentration: Finance GMAT 1: 770 Q0 V Followers: 40 Kudos [?]: 435 [0], given: 355 Re: Jill invests$10000 in an account that pays an annual rate [#permalink]  14 Nov 2013, 15:50
mikemcgarry wrote:
Jill invests $10000 in an account that pays an annual rate of 3.96%, compounding semi-annually. Approximately how much does she have in her account after two years? (A)$10079.44
(B) $10815.83 (C)$12652.61
(D) $14232.14 (E)$20598.11

On the GMAT, you are not allowed to use a calculator, and yet the test can give you problems like this. It is so important to learn estimation skills that allow you to dispatch questions like this with simple arithmetic. For a full discussion of estimation strategies, as well as an analysis of this question, see:
http://magoosh.com/gmat/2012/the-power- ... mat-quant/

Mike

I don't know how I got this wrong.

3.96% = 0.0396

Then 1.0396^4 (4 semesters in 2 years) * 10^4
Then (10*1.0396)^4
So you get (10.396^4) as the answer.
So answer should have 6 in last digit but I don't see any answer choice that fits the bill.

Any ideas?
Cheers!
J
Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 2791
Followers: 947

Kudos [?]: 3974 [0], given: 44

Re: Jill invests $10000 in an account that pays an annual rate [#permalink] 14 Nov 2013, 16:04 Expert's post jlgdr wrote: mikemcgarry wrote: Jill invests$10000 in an account that pays an annual rate of 3.96%, compounding semi-annually. Approximately how much does she have in her account after two years?

(A) $10079.44 (B)$10815.83
(C) $12652.61 (D)$14232.14
(E) $20598.11 On the GMAT, you are not allowed to use a calculator, and yet the test can give you problems like this. It is so important to learn estimation skills that allow you to dispatch questions like this with simple arithmetic. For a full discussion of estimation strategies, as well as an analysis of this question, see: http://magoosh.com/gmat/2012/the-power- ... mat-quant/ Mike I don't know how I got this wrong. 3.96% = 0.0396 Then 1.0396^4 (4 semesters in 2 years) * 10^4 Then (10*1.0396)^4 So you get (10.396^4) as the answer. So answer should have 6 in last digit but I don't see any answer choice that fits the bill. Any ideas? Cheers! J Dear J, What you thought was a clever approach, but you see, with money, folks always round everything to the nearest penny. That units digit might be in the tenths or hundreds or thousands of cent, so that just gets rounded off and does not appear in the monetary answers. In fact, three places after the decimal is the thousands place for the 6 in 10.396, so when we raise that to the fourth, the final 6 would be in the trillionth place, the 12th place after the decimal point. That's definitely a decimal place you will not see on your bank statement! Does all this make sense? Mike _________________ Mike McGarry Magoosh Test Prep Current Student Joined: 06 Sep 2013 Posts: 2036 Concentration: Finance GMAT 1: 770 Q0 V Followers: 40 Kudos [?]: 435 [0], given: 355 Re: Jill invests$10000 in an account that pays an annual rate [#permalink]  27 Dec 2013, 07:11
mikemcgarry wrote:
jlgdr wrote:
mikemcgarry wrote:
Jill invests $10000 in an account that pays an annual rate of 3.96%, compounding semi-annually. Approximately how much does she have in her account after two years? (A)$10079.44
(B) $10815.83 (C)$12652.61
(D) $14232.14 (E)$20598.11

On the GMAT, you are not allowed to use a calculator, and yet the test can give you problems like this. It is so important to learn estimation skills that allow you to dispatch questions like this with simple arithmetic. For a full discussion of estimation strategies, as well as an analysis of this question, see:
http://magoosh.com/gmat/2012/the-power- ... mat-quant/

Mike

I don't know how I got this wrong.

3.96% = 0.0396

Then 1.0396^4 (4 semesters in 2 years) * 10^4
Then (10*1.0396)^4
So you get (10.396^4) as the answer.
So answer should have 6 in last digit but I don't see any answer choice that fits the bill.

Any ideas?
Cheers!
J

Dear J,
What you thought was a clever approach, but you see, with money, folks always round everything to the nearest penny. That units digit might be in the tenths or hundreds or thousands of cent, so that just gets rounded off and does not appear in the monetary answers. In fact, three places after the decimal is the thousands place for the 6 in 10.396, so when we raise that to the fourth, the final 6 would be in the trillionth place, the 12th place after the decimal point. That's definitely a decimal place you will not see on your bank statement!
Does all this make sense?
Mike

Yeah got it Mike, that was very kind of you to clarify

Thanks

Cheers!
J

PS. I guess one can use simple interest to solve cause the answer choices are quite spread between you can easily arrive at something near 8%

Hence B the answer
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Re: Jill invests $10000 in an account that pays an annual rate [#permalink] 04 May 2015, 01:31 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: Jill invests$10000 in an account that pays an annual rate   [#permalink] 04 May 2015, 01:31
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