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# Bob invested one half of his savings in a bond that paid simple intere

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Math Expert
Joined: 02 Sep 2009
Posts: 43323

Kudos [?]: 139428 [0], given: 12790

Bob invested one half of his savings in a bond that paid simple intere [#permalink]

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21 Apr 2015, 04:45
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Difficulty:

85% (hard)

Question Stats:

52% (02:03) correct 48% (02:25) wrong based on 87 sessions

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Bob invested one half of his savings in a bond that paid simple interest for 2 years and received $550 as interest. He invested the remaining in a bond that paid compound interest (compounded annually) for the same 2 years at the same rate of interest and received$605 as interest. What was the annual rate of interest?

(A) 5%
(B) 10%
(C) 12%
(D) 15%
(E) 20%

Kudos for a correct solution.
[Reveal] Spoiler: OA

_________________

Kudos [?]: 139428 [0], given: 12790

Intern
Joined: 24 Mar 2015
Posts: 35

Kudos [?]: 20 [2], given: 17

Concentration: General Management, Marketing
GMAT 1: 660 Q44 V38
GPA: 3.21
WE: Science (Pharmaceuticals and Biotech)
Re: Bob invested one half of his savings in a bond that paid simple intere [#permalink]

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21 Apr 2015, 07:42
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Bunuel wrote:
Bob invested one half of his savings in a bond that paid simple interest for 2 years and received $550 as interest. He invested the remaining in a bond that paid compound interest (compounded annually) for the same 2 years at the same rate of interest and received$605 as interest. What was the annual rate of interest?

(A) 5%
(B) 10%
(C) 12%
(D) 15%
(E) 20%

Kudos for a correct solution.

First divide $550/2years to get 275$/yr non-compounding interest.

Next, subtract from the total compound after 2 years to see the interest gained in the second year. This can be done because the same amount has been invested in both accounts and the interest gained for the first year will be the same. So, $605-$275= $330. To find the difference in interest gained,$330-$275=$55 increase in interest after the first year through compounding.

From this information we can set up the equation $275 * X% =$55... 55/275=1/5=20% giving us answer choice E.
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Kudos [?]: 20 [2], given: 17

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Joined: 07 Aug 2011
Posts: 579

Kudos [?]: 607 [4], given: 75

GMAT 1: 630 Q49 V27
Re: Bob invested one half of his savings in a bond that paid simple intere [#permalink]

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21 Apr 2015, 08:37
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This post was
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Bunuel wrote:
Bob invested one half of his savings in a bond that paid simple interest for 2 years and received $550 as interest. He invested the remaining in a bond that paid compound interest (compounded annually) for the same 2 years at the same rate of interest and received$605 as interest. What was the annual rate of interest?

(A) 5%
(B) 10%
(C) 12%
(D) 15%
(E) 20%

Kudos for a correct solution.

For the first year SimpleInterest and Compound interest will always be same if compounding is done annually.
So, the difference $$605 - 550 = 55$$ is attributed to 275$which accumulated at the end of 1st year in the CompoundInterest account. $$275 * \frac{R}{100} = 55$$ $$R=20%$$ Answer E. _________________ Thanks, Lucky _______________________________________________________ Kindly press the to appreciate my post !! Kudos [?]: 607 [4], given: 75 Math Expert Joined: 02 Sep 2009 Posts: 43323 Kudos [?]: 139428 [0], given: 12790 Re: Bob invested one half of his savings in a bond that paid simple intere [#permalink] ### Show Tags 27 Apr 2015, 02:30 Bunuel wrote: Bob invested one half of his savings in a bond that paid simple interest for 2 years and received$550 as interest. He invested the remaining in a bond that paid compound interest (compounded annually) for the same 2 years at the same rate of interest and received $605 as interest. What was the annual rate of interest? (A) 5% (B) 10% (C) 12% (D) 15% (E) 20% Kudos for a correct solution. CHECK VERITAS PREP OFFICIAL SOLUTION HERE: _________________ Kudos [?]: 139428 [0], given: 12790 Senior Manager Joined: 15 Jan 2017 Posts: 360 Kudos [?]: 8 [0], given: 830 Re: Bob invested one half of his savings in a bond that paid simple intere [#permalink] ### Show Tags 06 Dec 2017, 13:14 Used hit and trial. 605 - 550 = 55 dollars a) 5% of x is 25. So tried 10% (option B) --> it is$550

10% *550+500 = 605

Total interest = 10%+ 10%= 20 % interest

Kudos [?]: 8 [0], given: 830

Re: Bob invested one half of his savings in a bond that paid simple intere   [#permalink] 06 Dec 2017, 13:14
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