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Jill invests $10000 in an account that pays an annual rate [#permalink] ### Show Tags 24 Jan 2013, 17:09 3 This post received KUDOS Expert's post 6 This post was BOOKMARKED 00:00 Difficulty: 35% (medium) Question Stats: 69% (02:19) correct 31% (01:45) wrong based on 228 sessions ### HideShow timer Statistics 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.  Magoosh Discount Codes Veritas Prep GMAT Discount Codes Kaplan GMAT Prep Discount Codes Manager Joined: 23 Jan 2013 Posts: 174 Concentration: Technology, Other Schools: Haas GMAT Date: 01-14-2015 WE: Information Technology (Computer Software) Followers: 3 Kudos [?]: 43 [1] , given: 41 Re: Jill invests$10000 in an account that pays an annual rate [#permalink]

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25 Jan 2013, 09:15
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amount = principal * ( 1+ r/n) ^nt
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29 Jan 2013, 22:49
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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.
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Re: Jill invests $10000 in an account that pays an annual rate [#permalink] ### Show Tags 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: 3640 Followers: 1250 Kudos [?]: 5666 [0], given: 60 Re: Jill invests$10000 in an account that pays an annual rate [#permalink]

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14 Nov 2013, 16:04
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
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Re: Jill invests $10000 in an account that pays an annual rate [#permalink] ### Show Tags 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 GMAT Club Legend Joined: 09 Sep 2013 Posts: 12908 Followers: 563 Kudos [?]: 158 [0], given: 0 Re: Jill invests$10000 in an account that pays an annual rate [#permalink]

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04 May 2015, 01:31
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Re: Jill invests $10000 in an account that pays an annual rate [#permalink] ### Show Tags 19 Sep 2016, 17:31 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] 19 Sep 2016, 17:31
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