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The annual interest rate earned by an investment increased

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The annual interest rate earned by an investment increased [#permalink] New post 22 Aug 2006, 01:22
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A
B
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E

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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
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 [#permalink] New post 22 Aug 2006, 07:12
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 %

Answer A ?
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 [#permalink] New post 22 Aug 2006, 12:18
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%
hence answer should be (B).
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 [#permalink] New post 22 Aug 2006, 12:46
logically I do not see how you can increase from 1.1 percent to 1 percent?
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 [#permalink] New post 23 Aug 2006, 07:00
oops .. sorry .. I took it as a decrease in interest rate as compared to last year .. my bad.
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  [#permalink] 23 Aug 2006, 07:00
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