Check GMAT Club Decision Tracker for the Latest School Decision Releases https://gmatclub.com/AppTrack

 It is currently 23 May 2017, 07:16

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

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

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Donald plans to invest x dollars in a savings account that pays intere

Author Message
TAGS:

Hide Tags

Senior Manager
Joined: 07 Nov 2009
Posts: 306
Followers: 9

Kudos [?]: 591 [0], given: 20

Donald plans to invest x dollars in a savings account that pays intere [#permalink]

Show Tags

21 Jul 2010, 22:34
3
This post was
BOOKMARKED
00:00

Difficulty:

45% (medium)

Question Stats:

64% (02:00) correct 36% (02:11) wrong based on 73 sessions

HideShow timer Statistics

Donald plans to invest x dollars in a savings account that pays interest at an annual rate of 8% compounded quarterly. Approximately what amount is the minimum that Donald will need to invest to earn over $100 in interest within 6 months? A.$1500
B. $1750 C.$2000
D. $2500 E.$3000

The formula for calculating compound interest is A = P(1 + r/n)nt where the variables represent the following:
A = amount of money accumulated after t years (principal + interest)
P = principal investment
r = interest rate (annual)
n = number of times per year interest is compounded
t = number of years
[Reveal] Spoiler: OA
Manager
Joined: 20 Jul 2010
Posts: 190
Followers: 2

Kudos [?]: 121 [0], given: 7

Re: Donald plans to invest x dollars in a savings account that pays intere [#permalink]

Show Tags

22 Jul 2010, 00:06
1
This post was
BOOKMARKED
IMO D
rohitgoel15 wrote:
Donald plans to invest x dollars in a savings account that pays interest at an annual rate of 8% compounded quarterly. Approximately what amount is the minimum that Donald will need to invest to earn over $100 in interest within 6 months?$1500
$1750$2000
$2500$3000

The formula for calculating compound interest is A = P(1 + r/n)nt where the variables represent the following:
A = amount of money accumulated after t years (principal + interest)
P = principal investment
r = interest rate (annual)
n = number of times per year interest is compounded
t = number of years

Solution:
r = Rate = 8% compounded quarterly.. = 2% per quarter
t = 6 motnhs = 2 quarters
So A = P (1+0.02)^2
=> A = P * 1.0404

Subsitute, P for 1500, 1700, 2000.. The A-P should be greater than 100 (since Interest = Amount - principal).
For 2500, interest is 101...

Hence, D
_________________

Gotta hit the 700 score this time... 3rd time lucky !
Give me some kudos... Like you, even I need them badly

CEO
Status: Nothing comes easy: neither do I want.
Joined: 12 Oct 2009
Posts: 2786
Location: Malaysia
Concentration: Technology, Entrepreneurship
Schools: ISB '15 (M)
GMAT 1: 670 Q49 V31
GMAT 2: 710 Q50 V35
Followers: 236

Kudos [?]: 1723 [0], given: 235

Re: Donald plans to invest x dollars in a savings account that pays intere [#permalink]

Show Tags

22 Jul 2010, 00:20
1
This post was
BOOKMARKED
A = P(1 + r/n)nt here t =1/2 and n=4
=> A = P(1 + 8 %/4)4*(1/2)
=> A = P(1 + 2%)^2
=> A = P ( 1+ (2%)^2 + 4%) ,(2%)^2 is very small and can be ignored

=> A = P ( 1+4%) => A-P = P*4%
Also A-P = 100 => P = 100/4% = 100*100/4 = 2500
_________________

Fight for your dreams :For all those who fear from Verbal- lets give it a fight

Money Saved is the Money Earned

Jo Bole So Nihaal , Sat Shri Akaal

GMAT Club Premium Membership - big benefits and savings

Gmat test review :
http://gmatclub.com/forum/670-to-710-a-long-journey-without-destination-still-happy-141642.html

Director
Joined: 05 Mar 2015
Posts: 905
Followers: 9

Kudos [?]: 198 [0], given: 40

Re: Donald plans to invest x dollars in a savings account that pays intere [#permalink]

Show Tags

05 Jun 2016, 05:08
temp33 wrote:
IMO D
rohitgoel15 wrote:
Donald plans to invest x dollars in a savings account that pays interest at an annual rate of 8% compounded quarterly. Approximately what amount is the minimum that Donald will need to invest to earn over $100 in interest within 6 months?$1500
$1750$2000
$2500$3000

The formula for calculating compound interest is A = P(1 + r/n)nt where the variables represent the following:
A = amount of money accumulated after t years (principal + interest)
P = principal investment
r = interest rate (annual)
n = number of times per year interest is compounded
t = number of years

Solution:
r = Rate = 8% compounded quarterly.. = 2% per quarter
t = 6 motnhs = 2 quarters
So A = P (1+0.02)^2
=> A = P * 1.0404

Subsitute, P for 1500, 1700, 2000.. The A-P should be greater than 100 (since Interest = Amount - principal).
For 2500, interest is 101...

Hence, D

Can anyone plz suggest why taking fractional values doesn't meet the ans as per my below solution
x(1+8/400)^2>x+100
x(51/50)^2>x+100
(26x/25)-x>100
x/25>100
x>2500
so ans must be E.

Thanks .
Re: Donald plans to invest x dollars in a savings account that pays intere   [#permalink] 05 Jun 2016, 05:08
Similar topics Replies Last post
Similar
Topics:
1 Kate made a deposit in a savings account that pays 5% compound interes 3 19 Oct 2016, 08:15
8 Bob invested one half of his savings in a bond that paid simple intere 4 15 Feb 2017, 14:27
6 Bob invested one half of his savings in a bond that paid simple intere 3 27 Apr 2015, 03:30
28 Julie put half of her savings in a savings account that pays 6 13 Apr 2016, 18:15
46 Donald plans to invest x dollars in a savings account that 21 09 Apr 2017, 21:53
Display posts from previous: Sort by