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Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye

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Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 22 Dec 2015, 21:47
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Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

1. $500
2. $550
3. $600
4. $650
5. $700

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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 23 Dec 2015, 05:41
Forget conventional ways of solving math questions. In PS, IVY approach is the easiest and quickest way to find the answer.

Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

1. $500
2. $550
3. $600
4. $650
5. $700


Bob earned 2000*(1+0.12) in total by fund A and earned 1000*(1+0.3)^2 in total by fund B.
So 2000*(1.12) - 1000*(1.69)= 550.



The answer is, therefore, (B).
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 23 Dec 2015, 09:32
But Fund A didn't mention anything about compound interest. SO I took simple interest formula p*r*t/100. so 2000*12*2/100 that leaves 480....am I missing anything?
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 25 Apr 2016, 09:34
alice7 wrote:
But Fund A didn't mention anything about compound interest. SO I took simple interest formula p*r*t/100. so 2000*12*2/100 that leaves 480....am I missing anything?


Hi alice7

You are missing the point that the 12 percent interest rate was for 2 years combined as stated in the question stem - "the money in Fund A earned a total interest of 12 percent for the two years combined".

Thanks
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 01 May 2016, 07:09
RSOHAL wrote:
Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

1. $500
2. $550
3. $600
4. $650
5. $700


"the money in Fund A earned a total interest of 12 percent for the two years combined" -- do we need to consider here compound interest of one year?

Please advise
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 01 May 2016, 07:16
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smartguy595 wrote:
RSOHAL wrote:
Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

1. $500
2. $550
3. $600
4. $650
5. $700


"the money in Fund A earned a total interest of 12 percent for the two years combined" -- do we need to consider here compound interest of one year?

Please advise


No, it has to be simple interest unless stated in the question. As you can see the question specifically mentions that 30 % annual interest compounded annually for fund B, but nothing of that short ois mentioned for fund A.
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 01 May 2016, 07:22
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powellmittra wrote:
smartguy595 wrote:
RSOHAL wrote:
Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

1. $500
2. $550
3. $600
4. $650
5. $700


"the money in Fund A earned a total interest of 12 percent for the two years combined" -- do we need to consider here compound interest of one year?

Please advise


No, it has to be simple interest unless stated in the question. As you can see the question specifically mentions that 30 % annual interest compounded annually for fund B, but nothing of that short ois mentioned for fund A.


So the interest earned for A is (2000*1*12)/100 => 240

2240-1690=550
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 01 May 2016, 07:29
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[quote="RSOHAL"]Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

1. $500
2. $550
3. $600
4. $650
5. $700

interest on fund A will be 240. rate of interest will be 6% per annum simple interest as 12% is for 2 year. this will make investment A 2240 at the end of 2nd year.
interest on fund B will be 690 on 30% interest compounded annually. This will make investment B 1690 at the end of 2nd year.
Difference in investment A and investment B=2240-1690=550
answer is B.
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 12 Dec 2016, 20:04
Does 12% combined interest means that we need to split 12% into the numbers of years under consideration?
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 21 Dec 2016, 08:36
Even I have the same question as AmritaSarkar89

Can some one please comment on what to interpret of the statement " the money in Fund A earned a total interest of 12 percent for the two years combined? "

Thank you in advance Bunuel and chetan2u!
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 21 Dec 2016, 08:51
Keats wrote:
Even I have the same question as AmritaSarkar89

Can some one please comment on what to interpret of the statement " the money in Fund A earned a total interest of 12 percent for the two years combined? "

Thank you in advance Bunuel and chetan2u!


It was addressed above. The money in Fund A earned a total interest of 12 percent for the two years combined. $100 earns total of $12 in two years.
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye  [#permalink]

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New post 18 Jan 2018, 14:15
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RSOHAL wrote:
Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

1. $500
2. $550
3. $600
4. $650
5. $700


The interest earned in fund A was 1,000 x 0.12 x 2 = 240 dollars, bringing his total investment in fund A to 2,240 dollars.

Using the formula for compound interest, the final value of investment B after 2 years was:

Final value = 1,000(1 + 0.3)^2

Final value = 1,000(1.3)^2

Final Value = 1,000(1.69) = 1,690

Thus, fund A was worth 2,240 - 1,690 = 550 dollars more than fund B.

Answer: B
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Re: Bob invested $2000 in fund A and $1000 in fund B. Over the next two ye &nbs [#permalink] 18 Jan 2018, 14:15
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