GMAT Question of the Day - Daily to your Mailbox; hard ones only

 It is currently 22 Oct 2018, 16:06

### 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

### Show Tags

22 Oct 2017, 06:13
00:00

Difficulty:

35% (medium)

Question Stats:

70% (01:20) correct 30% (01:47) wrong based on 82 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

_________________
Manager
Joined: 11 Feb 2017
Posts: 192

### Show Tags

22 Oct 2017, 13:57
1
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

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

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

*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 _________________ ___________________________________________________________________ For what are we born if not to aid one another? -- Ernest Hemingway Intern Joined: 27 Sep 2017 Posts: 1 How much interest will$2,000 earn at an annual rate of 8 percent in  [#permalink]

### Show Tags

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
Manager
Joined: 09 Aug 2017
Posts: 62
Location: United States
Concentration: Technology
GMAT 1: 640 Q44 V33
GMAT 2: 630 Q47 V29
WE: Research (Investment Banking)
How much interest will $2,000 earn at an annual rate of 8 percent in [#permalink] ### Show Tags 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. How much interest will$2,000 earn at an annual rate of 8 percent in &nbs [#permalink] 25 Oct 2017, 13:15
Display posts from previous: Sort by