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20 Nov 2017, 05:30
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Difficulty:
35%
(medium)
Question Stats:
76% (02:04) correct
24%
(01:56)
wrong
based on 87
sessions
History
Date
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Gwen invested $10000 at 5% compounded annually. Cheng invested $5000 at 10% compounded annually. How much greater will the total interest earned on Cheng's investment be in two years?
(a) $0
(b) $25
(c) $50
(d) $100
(e) $200
(a) $0
(b) $25
(c) $50
(d) $100
(e) $200
20 Nov 2017, 05:40
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saswata4s
First Sum = $10000 at 5% compounded annually
First sum after 2 years = (1.05)*(1.05)*10000 = $11025
Total Interest Earned = 11025 - 10000 = $1025
Second Sum = $10000 at 5% compounded annually
Second sum after 2 years = (1.10)*(1.10)*5000 = $6050
Total Interest Earned = 6050 - 5000 = $1050
Difference = 1050-1025 = $25
Answer: Option B
20 Nov 2017, 05:48
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10,000*5/100=500 Year 1
10,500*5/100=525 Year 2
Total interest= 1025
5000*10/100=500 Year 1
5500*10/100=550 Year 2
Total interest=1050
Hence difference in interest is 25$.
Sent from my iPhone using GMAT Club Forum mobile app
10,500*5/100=525 Year 2
Total interest= 1025
5000*10/100=500 Year 1
5500*10/100=550 Year 2
Total interest=1050
Hence difference in interest is 25$.
Sent from my iPhone using GMAT Club Forum mobile app
