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Akhil invests \$1,200 in a certificate of deposit (CD) that earns 1.05%

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Akhil invests \$1,200 in a certificate of deposit (CD) that earns 1.05%  [#permalink]

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12 Feb 2019, 23:41
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Question Stats:

33% (03:01) correct 67% (02:20) wrong based on 6 sessions

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Akhil invests \$1,200 in a certificate of deposit (CD) that earns 1.05% in interest compounded biannually, which means that he earns 1.05% of his existing money twice per year. The money he makes in interest is added to his account balance and rounded to the nearest cent. After two years, the CD matures. Akhil decides to use \$400 of the funds to purchase a tablet and invest the remaining balance in another CD. How much money did Akhil invest in this second CD?

(A) \$800.00
(B) \$850.40
(C) \$851.20
(D) \$1,250.40
(E) \$1,251.20

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Akhil invests \$1,200 in a certificate of deposit (CD) that earns 1.05%  [#permalink]

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13 Feb 2019, 05:24
Bunuel wrote:
Akhil invests \$1,200 in a certificate of deposit (CD) that earns 1.05% in interest compounded biannually, which means that he earns 1.05% of his existing money twice per year. The money he makes in interest is added to his account balance and rounded to the nearest cent. After two years, the CD matures. Akhil decides to use \$400 of the funds to purchase a tablet and invest the remaining balance in another CD. How much money did Akhil invest in this second CD?

(A) \$800.00
(B) \$850.40
(C) \$851.20
(D) \$1,250.40
(E) \$1,251.20

GMATinsight
could you please share solution where this question can be solved <2 mins..
using conventional formula of CI its taking > 2mins..
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Akhil invests \$1,200 in a certificate of deposit (CD) that earns 1.05%  [#permalink]

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15 Feb 2019, 04:40
Bunuel wrote:
Akhil invests \$1,200 in a certificate of deposit (CD) that earns 1.05% in interest compounded biannually, which means that he earns 1.05% of his existing money twice per year. The money he makes in interest is added to his account balance and rounded to the nearest cent. After two years, the CD matures. Akhil decides to use \$400 of the funds to purchase a tablet and invest the remaining balance in another CD. How much money did Akhil invest in this second CD?

(A) \$800.00
(B) \$850.40
(C) \$851.20
(D) \$1,250.40
(E) \$1,251.20

after six months = 1.0105*1200 = 1212.6

after 1 year = 1.0105*1212.6 = 1225.33

after 1.5 year = 1.0105*1225.33 = 1238.20

after 2 years = 1.0105*1238.20 = 1251.20

Remaining sum after withdrawing 400 = 851.20

Archit3110 It's taking longer than two minutes with manual calculation

Bunuel Is the answer correct??? if \$400 is used then how can re-investment amount be more than 1200???
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Akhil invests \$1,200 in a certificate of deposit (CD) that earns 1.05%   [#permalink] 15 Feb 2019, 04:40
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