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$1200 is invested at a given interest rate for two years.

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$1200 is invested at a given interest rate for two years.  [#permalink]

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New post 11 Aug 2013, 05:05
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$1200 is invested at a given interest rate for two years. The difference between the simple 2-year non-compounded return at the end of the two years and an annually compounded return is $132. What is the interest rate?

10%
11%
12%
13%
14%

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Re: $1200 is invested at a given interest rate for two years.  [#permalink]

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New post 22 Aug 2013, 03:32
mridulparashar1 wrote:
$1200 is invested at a given interest rate for two years. The difference between the simple 2-year non-compounded return at the end of the two years and an annually compounded return is $132. What is the interest rate?
10%
11%
12%
13%
14%


For first year there will not be any difference in interest accrued using either Non-compounded or compounded rate. This means that the difference that has accrued must be the result of one year simple interest rate.
Option A will give 120
Option B will give 132 - Our Answer

Answer B
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$1200 is invested at a given interest rate for two years.  [#permalink]

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New post 05 Feb 2016, 07:48
WoundedTiger :
This a wrong question. none of the answer choices work
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$1200 is invested at a given interest rate for two years. The differen  [#permalink]

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New post 19 Apr 2018, 10:31
$1200 is invested at a given interest rate for two years. The difference between the simple 2-year non-compounded return at the end of the two years and an annually compounded return is $132. What is the interest rate?

10%
11%
12%
13%
14%
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Re: $1200 is invested at a given interest rate for two years. The differen  [#permalink]

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New post 19 Apr 2018, 11:48
stne wrote:
$1200 is invested at a given interest rate for two years. The difference between the simple 2-year non-compounded return at the end of the two years and an annually compounded return is $132. What is the interest rate?

10%
11%
12%
13%
14%


The formula for difference between SI and CI for two years is given by P*(r/100)^2

P*(r/100)^2 = 132
P = 1200
Solving we get r = 33%

confused!!!!!!!!!!


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Re: $1200 is invested at a given interest rate for two years. The differen  [#permalink]

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New post 19 Apr 2018, 12:12
prince00113 wrote:
stne wrote:
$1200 is invested at a given interest rate for two years. The difference between the simple 2-year non-compounded return at the end of the two years and an annually compounded return is $132. What is the interest rate?

10%
11%
12%
13%
14%


The formula for difference between SI and CI for two years is given by P*(r/100)^2

P*(r/100)^2 = 132
P = 1200
Solving we get r = 33%

confused!!!!!!!!!!


Please give Kudos if the reply helped you


We know for the first year SI and CI are the same .
Let for the first year rate be R% and SI be x , this can be written as \(\frac{R}{100}*1200 = x\) (i)

Now for the second year the extra money in CI is because interest is calculated on principal + interest and NOT just the interest.
Hence \(\frac{R}{100}\)*(1200+x) =132 (ii)

Substitute the value of x from (i) in (ii) and after simplification we get
R=10%

Hope this helps .
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Re: $1200 is invested at a given interest rate for two years. The differen  [#permalink]

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New post 19 Apr 2018, 12:23
stne wrote:
prince00113 wrote:
stne wrote:
$1200 is invested at a given interest rate for two years. The difference between the simple 2-year non-compounded return at the end of the two years and an annually compounded return is $132. What is the interest rate?

10%
11%
12%
13%
14%


The formula for difference between SI and CI for two years is given by P*(r/100)^2

P*(r/100)^2 = 132
P = 1200
Solving we get r = 33%

confused!!!!!!!!!!


Please give Kudos if the reply helped you


We know for the first year SI and CI are the same .
Let for the first year rate be R% and SI be x , this can be written as \(\frac{R}{100}*1200 = x\) (i)

Now for the second year the extra money in CI is because interest is calculated on principal + interest and NOT just the interest.
Hence \(\frac{R}{100}\)*(1200+x) =132 (ii)

Substitute the value of x from (i) in (ii) and after simplification we get
R=10%

Hope this helps .




CI for 1200$ with 10% interest for 2 years 252$
SI for 1200$ with 10% interest for 2 years 240$

CI-SI = 12$

Hope this clears the doubt
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Re: $1200 is invested at a given interest rate for two years. The differen  [#permalink]

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New post 19 Apr 2018, 12:27
Yes , what you say seems to be correct ! Lets see what others have to say, picked this question from GMAT club forum only, topic was locked hence re posted it here.
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Re: $1200 is invested at a given interest rate for two years. The differen &nbs [#permalink] 19 Apr 2018, 12:27
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