NEW HERE? LEARN MORE
closeclose
Last visit was: 11 May 2024, 14:06 It is currently 11 May 2024, 14:06
Decision Tracker
My Rewards
New posts
New comers' posts

Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel

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

SORT BY:
Date
Kudos
Tags:
Poor Qualityx      
Find Similar Topics 
Show Tags
Hide Tags
User avatar
WoundedTiger
Director
Director
Joined: 25 Apr 2012
Posts: 529
Own Kudos [?]: 2290 [1]
Given Kudos: 740
Location: India
GPA: 3.21
WE:Business Development (Other)
Send PM
Reviews Badge
$1200 is invested at a given interest rate for two years. [#permalink] New post   11 Aug 2013, 05:05
1
Bookmarks
00:00
A
B
C
D
E

Difficulty:

95% (hard)

Question Stats:

33% (02:37) correct 67% (02:24) wrong based on 36 sessions
Hide Show 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%

This Question is Locked Due to Poor Quality
Hi there,
The question you've reached has been archived due to not meeting our community quality standards. No more replies are possible here.
Looking for better-quality questions? Check out the 'Similar Questions' block below for a list of similar but high-quality questions.
Want to join other relevant Problem Solving discussions? Visit our Problem Solving (PS) Forum for the most recent and top-quality discussions.
Thank you for understanding, and happy exploring!
ShowHide Answer
Official Answer
A
User avatar
B
fameatop
Senior Manager
Senior Manager
Joined: 24 Aug 2009
Posts: 388
Own Kudos [?]: 2267 [0]
Given Kudos: 276
Concentration: Finance
Schools:Harvard, Columbia, Stern, Booth, LSB,
Send PM
Re: $1200 is invested at a given interest rate for two years. [#permalink] 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
User avatar
B
NoHalfMeasures
Retired Moderator
Joined: 29 Oct 2013
Posts: 220
Own Kudos [?]: 2017 [0]
Given Kudos: 204
Concentration: Finance
GPA: 3.7
WE:Corporate Finance (Retail Banking)
Send PM
GMAT ToolKit User
Re: $1200 is invested at a given interest rate for two years. [#permalink] New post   05 Feb 2016, 07:48
WoundedTiger :
This a wrong question. none of the answer choices work
User avatar
G
prince00113
Manager
Manager
Joined: 17 Mar 2015
Posts: 73
Own Kudos [?]: 225 [0]
Given Kudos: 64
Send PM
GMAT ToolKit User Reviews Badge
Re: $1200 is invested at a given interest rate for two years. [#permalink] 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!!!!!!!!!!


Please give Kudos if the reply helped you
User avatar
L
stne
SVP
SVP
Joined: 27 May 2012
Posts: 1683
Own Kudos [?]: 1436 [0]
Given Kudos: 633
Send PM
Re: $1200 is invested at a given interest rate for two years. [#permalink] 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 .
User avatar
G
prince00113
Manager
Manager
Joined: 17 Mar 2015
Posts: 73
Own Kudos [?]: 225 [0]
Given Kudos: 64
Send PM
GMAT ToolKit User Reviews Badge
Re: $1200 is invested at a given interest rate for two years. [#permalink] 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

This Question is Locked Due to Poor Quality
Hi there,
The question you've reached has been archived due to not meeting our community quality standards. No more replies are possible here.
Looking for better-quality questions? Check out the 'Similar Questions' block below for a list of similar but high-quality questions.
Want to join other relevant Problem Solving discussions? Visit our Problem Solving (PS) Forum for the most recent and top-quality discussions.
Thank you for understanding, and happy exploring!
GMAT Club Bot
gmatclubot
Re: $1200 is invested at a given interest rate for two years. [#permalink]
19 Apr 2018, 12:23
Moderators:
Bunuel
Math Expert
93161 posts
yashikaaggarwal
Senior Moderator - Masters Forum
3137 posts

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne
Main navigation
GMAT Resources
Partners
MBA Resources
www.gmac.com|www.mba.com | | GMAT Club Rules | Terms and Conditions