It is currently 11 Dec 2017, 21:58

Close

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
Your Progress

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

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

How much interest will $2,000 earn at an annual rate of 8 percent in

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

Expert Post
Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 42544

Kudos [?]: 135295 [0], given: 12686

How much interest will $2,000 earn at an annual rate of 8 percent in [#permalink]

Show Tags

New post 22 Oct 2017, 06:13
00:00
A
B
C
D
E

Difficulty:

  35% (medium)

Question Stats:

65% (00:53) correct 35% (01:34) wrong based on 62 sessions

HideShow timer Statistics

How much interest will $2,000 earn at an annual rate of 8 percent in 1 year if the interest is compounded every 6 months?

(A) $160.00
(B) $163.20
(C) $249.73
(D) $332.80
(E) $2,163.20
[Reveal] Spoiler: OA

_________________

New to the Math Forum?
Please read this: Ultimate GMAT Quantitative Megathread | All You Need for Quant | PLEASE READ AND FOLLOW: 12 Rules for Posting!!!

Resources:
GMAT Math Book | Triangles | Polygons | Coordinate Geometry | Factorials | Circles | Number Theory | Remainders; 8. Overlapping Sets | PDF of Math Book; 10. Remainders | GMAT Prep Software Analysis | SEVEN SAMURAI OF 2012 (BEST DISCUSSIONS) | Tricky questions from previous years.

Collection of Questions:
PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. ,11 Mixed Questions, 12 Fresh Meat

DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS; 9 Devil's Dozen!!!; 10 Number Properties set., 11 New DS set.


What are GMAT Club Tests?
Extra-hard Quant Tests with Brilliant Analytics

Kudos [?]: 135295 [0], given: 12686

Manager
Manager
avatar
B
Joined: 11 Feb 2017
Posts: 175

Kudos [?]: 10 [0], given: 198

Re: How much interest will $2,000 earn at an annual rate of 8 percent in [#permalink]

Show Tags

New post 22 Oct 2017, 10:19
kartzcool wrote:
Can someone please help me with this.


I think Its B

Interest is compounded half yearly

so

(104/100)* 2000 = 2080 ....FOR 6 MONTHS

(104/100)*2080 = 2163.20....FOR NEXT 6 MONTHS

Total interest added = Final-Initial

2163.20-2000=163.2 ANSWER

B

Kudos [?]: 10 [0], given: 198

VP
VP
avatar
P
Joined: 22 May 2016
Posts: 1108

Kudos [?]: 397 [0], given: 640

How much interest will $2,000 earn at an annual rate of 8 percent in [#permalink]

Show Tags

New post 22 Oct 2017, 13:57
1
This post was
BOOKMARKED
Bunuel wrote:
How much interest will $2,000 earn at an annual rate of 8 percent in 1 year if the interest is compounded every 6 months?

(A) $160.00
(B) $163.20
(C) $249.73
(D) $332.80
(E) $2,163.20

Use answer choices

If the compound interest rate compounded yearly instead of every six months, interest earned would equal the simple interest rate.*

That would be (2000)(.08) = $160 in interest.

But this rate gets paid twice in one year. So the amount earned must be a little more than $160.

I would go straight to answer B.

If you wanted to check:

(\(\frac{4}{100}\))($2000) = $80
(\(\frac{4}{100}\))($2080) = (4)(20.8) ~ 83$
Total 80 + ~ $83 = ~ $163

Answer B

Compound interest formula
\(A= P(1 + \frac{r}{n})^{nt}\)

\(A = 2000(1.04)^2 = 2000(1.0816)=\)
$2,163.20
-2,000.00
$163.20

Answer B

*For just the first year, if compound interest rate compounds yearly, simple interest equals compound interest. Run the numbers with each formula. The result is identical: $160

Kudos [?]: 397 [0], given: 640

Intern
Intern
avatar
B
Joined: 27 Sep 2017
Posts: 1

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

How much interest will $2,000 earn at an annual rate of 8 percent in [#permalink]

Show Tags

New post 23 Oct 2017, 09:40
2000*(1+.08/2)^2=163.20
shortcut,
8% compunded half-yearly for 1 year ..>>so,8%/2=4%
now, use successive method for interest calculation>>(a+b+(a+b)/100).
4%+4%+(4%*4%)/100=8%+.16%=8.16%
>>2000*8.16%=163.20

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

Manager
Manager
User avatar
B
Joined: 09 Aug 2017
Posts: 59

Kudos [?]: 8 [0], given: 18

Location: United States
Concentration: Technology
GMAT 1: 640 Q44 V33
GMAT 2: 630 Q47 V29
WE: Research (Investment Banking)
CAT Tests
How much interest will $2,000 earn at an annual rate of 8 percent in [#permalink]

Show Tags

New post 25 Oct 2017, 13:15
8% compounded semiannually is really 4% compounded twice.
-So I took 4% * 2,000 = 80.
-Then I did 4% * 2000 + 4%*80 = 80+3.2=83.2
80+83.2=163.2, B.
_________________

I'd love to hear any feedback or ways to improve my problem solving. I make a lot of silly mistakes. If you've had luck improving on stupid mistakes, I'd love to hear how you did it.

Also, I appreciate any kudos.

Kudos [?]: 8 [0], given: 18

How much interest will $2,000 earn at an annual rate of 8 percent in   [#permalink] 25 Oct 2017, 13:15
Display posts from previous: Sort by

How much interest will $2,000 earn at an annual rate of 8 percent in

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.