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# ps INTEREST ( ddelta course )

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Joined: 30 May 2005
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ps INTEREST ( ddelta course ) [#permalink]  13 Sep 2005, 13:27
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hello

here it is ....

Ricardo deposits $1,000 in a bank account that pays 10% interest, compounded semiannually. Poonam deposits$1,000 in
a bank account that pays 10% interest, compounded annually.
If no more deposits are made, what is the difference between
the two account balances after 1 year?

A. $2.50 B.$10
C. $5 D.$15
E. $100 plz explains yours works thanks VP Joined: 22 Aug 2005 Posts: 1120 Location: CA Followers: 1 Kudos [?]: 47 [0], given: 0 [#permalink] 13 Sep 2005, 13:40 A$ 2.50

For Poonam, interest =
1000 * 10 / 100 (for 10%) * 1 (1 year)
or
$100 For Ricardo, Interest: 1000 * (1 + (10/2)/100) ^2 - 1000 (since interest is comounded semi-annually we double number of period (to 2) and half the interest rate (10/2)) =$ 102.5

ans: $102.5 -$100 = \$2.50
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