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.

It appears that you are browsing the GMAT Club forum unregistered!

Signing up is free, quick, and confidential.
Join other 500,000 members and get the full benefits of GMAT Club

Registration gives you:

Tests

Take 11 tests and quizzes from GMAT Club and leading GMAT prep companies such as Manhattan GMAT,
Knewton, and others. All are free for GMAT Club members.

Applicant Stats

View detailed applicant stats such as GPA, GMAT score, work experience, location, application
status, and more

Books/Downloads

Download thousands of study notes,
question collections, GMAT Club’s
Grammar and Math books.
All are free!

Thank you for using the timer!
We noticed you are actually not timing your practice. Click the START button first next time you use the timer.
There are many benefits to timing your practice, including:

John deposited $10,000 to open a new savings account that [#permalink]

Show Tags

16 Jul 2012, 04:36

2

This post received KUDOS

Expert's post

8

This post was BOOKMARKED

00:00

A

B

C

D

E

Difficulty:

25% (medium)

Question Stats:

70% (01:57) correct
30% (01:15) wrong based on 689 sessions

HideShow timer Statistics

John deposited $10,000 to open a new savings account that earned 4 percent annual interest, compounded quarterly. If there were no other transactions in the account, what was the amount of money in John's account 6 months after the account was opened?

Re: John deposited $10,000 to open a new savings account that [#permalink]

Show Tags

16 Jul 2012, 11:16

1

This post received KUDOS

1

This post was BOOKMARKED

john amount is compounded quarterly so the formula is A=P*(1+R/100)^N her p=principle R=rate of interest N=no of terms rate of interest is 4% for a yr so for quarter R=4/4=1% john receive amt after 6 mnts so there are two quarter so N=2 Amount A=P(1+R/100)^2 =10000(1+1/100)^2 =10000(1+0.01)^2 =10201

Re: John deposited $10,000 to open a new savings account that [#permalink]

Show Tags

20 Jul 2012, 03:03

2

This post received KUDOS

Expert's post

8

This post was BOOKMARKED

SOLUTION

John deposited $10,000 to open a new savings account that earned 4 percent annual interest, compounded quarterly. If there were no other transactions in the account, what was the amount of money in John's account 6 months after the account was opened?

For the first 3 moths interest was 1% of $10,000, so $100; For the next 3 moths interest was 1% of $10,000, plus 1% earned on previous interest of $100, so $100+$1=$101;

Total interest for 6 months was $100+$101=$201, hence balance after 6 months was $10,000+ $201=$10,201.

Answer: D.

Approach #2: If the interest were compounded every 6 moths instead of every 3 months (quarterly) then in 6 months the interest would be 4%/2=2% of $10,000, so $200. Now, since the interest is compounded quarterly then there would be interest earned on interest (very small amount) thus the actual interest should be a little bit more than $200, only answer choice D fits.

Re: John deposited $10,000 to open a new savings account that [#permalink]

Show Tags

19 Oct 2014, 08:48

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. _________________

Although this is the method they are looking for, the question is poorly worded. By explicitly saying that 4% was earned, this implies that 4% was the effective rate, and not nominal. Would have been better to say "the account earned a nominal annual interest rate of 4%". No more confusion.

gmatclubot

Re: John deposited $10,000 to open a new savings account that
[#permalink]
27 Jan 2016, 06:10

Part 2 of the GMAT: How I tackled the GMAT and improved a disappointing score Apologies for the month gap. I went on vacation and had to finish up a...

Cal Newport is a computer science professor at GeorgeTown University, author, blogger and is obsessed with productivity. He writes on this topic in his popular Study Hacks blog. I was...

So the last couple of weeks have seen a flurry of discussion in our MBA class Whatsapp group around Brexit, the referendum and currency exchange. Most of us believed...