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### Show Tags

11 Aug 2013, 04:05
1
00:00

Difficulty:

95% (hard)

Question Stats:

34% (02:39) correct 66% (02:15) wrong based on 68 sessions

### HideShow timer Statistics

$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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05 Feb 2016, 06:48
WoundedTiger :
This a wrong question. none of the answer choices work
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19 Apr 2018, 10:48
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!!!!!!!!!!

Director
Joined: 27 May 2012
Posts: 666

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19 Apr 2018, 11:23
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!!!!!!!!!!

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 Director Joined: 27 May 2012 Posts: 666 Re:$1200 is invested at a given interest rate for two years. The differen  [#permalink]

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19 Apr 2018, 11:27
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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