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# The annual interest rate earned by an investment increased

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Manager
Joined: 10 Oct 2005
Posts: 113
Location: Hollywood
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The annual interest rate earned by an investment increased [#permalink]  22 Aug 2006, 01:22
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Question Stats:

0% (00:00) correct 0% (00:00) wrong based on 1 sessions
The annual interest rate earned by an investment increased by 10% from last year to this year. If the annual interest rate earned by the investment this year was 1%, what was the annual interest rate last year?

(A) 1%

(B) 1.1%

(C) 9.1%

(D) 10%

(E) 10.8%
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Senior Manager
Joined: 14 Aug 2006
Posts: 365
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Kudos [?]: 6 [0], given: 0

If it increased by 10% and the increased value is 1%, then last year's interest should be less than 1%.

If amount = 100, interest = 100*1*1/100 = 1
Lastyear's interest = x.
.1x +x = 1; 1.1x =1; x = 1/1.1 = .9
~1 %

Manager
Joined: 09 Jul 2006
Posts: 85
Location: India
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Kudos [?]: 0 [0], given: 0

let last years interest rate be = x
this years interest rate will be = x*(1-0.1) (10% less) = 0.9x
also given that this years interest rate = 1%
thus, 0.9x = 1 => x = 1/0.9 = 1.1%
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Prashrash.

Senior Manager
Joined: 27 Jul 2006
Posts: 298
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logically I do not see how you can increase from 1.1 percent to 1 percent?
Manager
Joined: 09 Jul 2006
Posts: 85
Location: India
Followers: 1

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

oops .. sorry .. I took it as a decrease in interest rate as compared to last year .. my bad.
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Cheers!
Prashrash.

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