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# How much more interest will maria receive if she invests 1000$for one SORT BY: Tags: Show Tags Hide Tags Manager Joined: 26 Apr 2013 Status:folding sleeves up Posts: 101 Own Kudos [?]: 712 [211] Given Kudos: 39 Location: India Concentration: Finance, Strategy GMAT 1: 530 Q39 V23 GMAT 2: 560 Q42 V26 GPA: 3.5 WE:Consulting (Computer Hardware) Most Helpful Reply RC & DI Moderator Joined: 02 Aug 2009 Status:Math and DI Expert Posts: 11470 Own Kudos [?]: 34322 [55] Given Kudos: 322 Manager Joined: 17 Sep 2015 Posts: 68 Own Kudos [?]: 732 [38] Given Kudos: 155 General Discussion Manager Joined: 18 Sep 2014 Posts: 198 Own Kudos [?]: 238 [1] Given Kudos: 5 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
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How much more interest will maria receive if she invests 1000$for one year at x % annual interest, compounded semianually, than if she invest 1000$ for one year at x percent annual interest, compounded annually?

a> 5x
b> 10x
c> x^2/20
d> x^2/40
e>10x+ (x^2/40)

I dont from what source these questions are from.
See from simplification sake, take x =10%
(i) investing 1000$for one year at x % annual interest, compounded semiannually 1000*1.1*1.1=1210 Interest amount = 1210-1000=210 (ii)investing 1000$ for one year at x percent annual interest, compounded annually
1000*1.1=1100
Interest amount = 1100-1000=100
Difference in two cases = 210-100 = 110

Putting x=10 in the above option , none of them give 110 as an answer. Could kindly check the options you have posted as it cannot be D as you given the OA.
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Re: How much more interest will maria receive if she invests 1000$for one [#permalink] Gotcha! But can you please take some value such as 5% or 10% and try to solve it. And what did I miss in my calculations? Ravi Manager Joined: 18 Sep 2014 Posts: 198 Own Kudos [?]: 238 [11] Given Kudos: 5 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
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email2vm wrote:
Gotcha!

But can you please take some value such as 5% or 10% and try to solve it.

And what did I miss in my calculations?

Ravi

My bad, i also missed it.

See Ravi,
if you take x = 10%
Annually,
Its simple 1000*10*1/100=100
Semi annually,
1000(1+10/2*100)^2 = 1102.5
Interest amount = 1102.5-1000 = 102.5

Difference in interest = 102.5-100 = 2.5

Put x = 10 and see option D gives you 2.5. Hence D is the answer.
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Re: How much more interest will maria receive if she invests 1000$for one [#permalink] chetan2u wrote: FightToSurvive wrote: email2vm wrote: Gotcha! But can you please take some value such as 5% or 10% and try to solve it. And what did I miss in my calculations? Ravi My bad, i also missed it. See Ravi, if you take x = 10% Annually, Its simple 1000*10*1/100=100 Semi annually, 1000(1+10/2*100)^2 = 1102.5 Interest amount = 1102.5-1000 = 102.5 Difference in interest = 102.5-100 = 2.5 Put x = 10 and see option D gives you 2.5. Hence D is the answer. Correctly shown by you.. similarly RATE and TIME will change for quarterly compounded etc Yes I understood. For quarterly compounded, rate of interest =r/4 and time = 4n. Manager Joined: 03 Apr 2013 Posts: 222 Own Kudos [?]: 249 [1] Given Kudos: 872 Location: India Concentration: Marketing, Finance GMAT 1: 740 Q50 V41 GPA: 3 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
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email2vm wrote:
How much more interest will maria receive if she invests 1000$for one year at x % annual interest, compounded semianually, than if she invest 1000$ for one year at x percent annual interest, compounded annually?

a> 5x
b> 10x
c> x^2/20
d> x^2/40
e>10x+ (x^2/40)

Here is how i solved only to get it wrong:

let x=100%

annually :

SI = 1000*100/100*1 = 1000
total =1000+1000=2000

semiannually:

Si (for 1st 6 months) = 1000
total after 6 months =2000

Si(for last 6 months) = 2000
total after 6 months= 4000

more interest maria will receive = 2000

100^2/40 != 2000!!!

where am I wrong? Today it seems I am back to square 1

Ravi

To simplify calculations..take x = 100%..
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Re: How much more interest will maria receive if she invests 1000$for one [#permalink] I got this as Q3 on my GMATPrep. Is it possible to receive 700 level questions this early on the GMAT? Board of Directors Joined: 18 Jul 2015 Status:Emory Goizueta Alum Posts: 3596 Own Kudos [?]: 5466 [1] Given Kudos: 346 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
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Keats wrote:
I got this as Q3 on my GMATPrep. Is it possible to receive 700 level questions this early on the GMAT?

There are two things I wanna say :

1. I don't think this question is of 700 level. It's an easy question. I will count it as 600-650 level. It could be solved in hardly 1 min if you solve with a proper approach.
2. Yes, On GMAT sometimes you may get 700 level questions too early. And if you excel in those, you may head towards your dream score very easily.
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Re: How much more interest will maria receive if she invests 1000$for one [#permalink] 3 Kudos abhimahna wrote: Keats wrote: I got this as Q3 on my GMATPrep. Is it possible to receive 700 level questions this early on the GMAT? There are two things I wanna say : 1. I don't think this question is of 700 level. It's an easy question. I will count it as 600-650 level. It could be solved in hardly 1 min if you solve with a proper approach. 2. Yes, On GMAT sometimes you may get 700 level questions too early. And if you excel in those, you may head towards your dream score very easily. 1. I see what you have to say abhimahna. I quoted 700 level based on GMATClub stats. Moreover, what might be easy for you (or probably me) might not be easy for the other one. 2. Since I did hit a Q 51 on this GMAT Prep Exam 5 (EP2) with one mistake on Q 30, I genuinely wanted to see if we get high level questions this early (in case of a Q 51). I googled my questions starting Q 2 to Q 7 and except Q 2 (600-700), all were rated as 700 level per GMATClub stats. Board of Directors Joined: 18 Jul 2015 Status:Emory Goizueta Alum Posts: 3596 Own Kudos [?]: 5466 [0] Given Kudos: 346 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
Keats wrote:
abhimahna wrote:
Keats wrote:
I got this as Q3 on my GMATPrep. Is it possible to receive 700 level questions this early on the GMAT?

There are two things I wanna say :

1. I don't think this question is of 700 level. It's an easy question. I will count it as 600-650 level. It could be solved in hardly 1 min if you solve with a proper approach.
2. Yes, On GMAT sometimes you may get 700 level questions too early. And if you excel in those, you may head towards your dream score very easily.

1. I see what you have to say abhimahna. I quoted 700 level based on GMATClub stats. Moreover, what might be easy for you (or probably me) might not be easy for the other one.
2. Since I did hit a Q 51 on this GMAT Prep Exam 5 (EP2) with one mistake on Q 30, I genuinely wanted to see if we get high level questions this early (in case of a Q 51). I googled my questions starting Q 2 to Q 7 and except Q 2 (600-700), all were rated as 700 level per GMATClub stats.

Yes brother, I understand your point. But as I said all you need to get through this question is a systematic approach. If you follow the same, you will appreciate my point that its an easy and straightforward question. If someone is considering this question a tougher one, then the person either lacks the basic skills or not able to recollect those at the time of answering this question.

Regarding Q51, I also felt the same when I got the same score in Mocks. Its all about how you are gonna play with GMAT algorithm. If you beat it at the beginning only, GMAT will throw a score of 51 on you.
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Re: How much more interest will maria receive if she invests 1000$for one [#permalink] 2 Kudos chetan2u wrote: email2vm wrote: How much more interest will maria receive if she invests 1000$ for one year at x % annual interest, compounded semianually, than if she invest 1000$for one year at x percent annual interest, compounded annually? a> 5x b> 10x c> x^2/20 d> x^2/40 e>10x+ (x^2/40) Here is how i solved only to get it wrong: let x=100% annually : SI = 1000*100/100*1 = 1000 total =1000+1000=2000 semiannually: Si (for 1st 6 months) = 1000 total after 6 months =2000 Si(for last 6 months) = 2000 total after 6 months= 4000 more interest maria will receive = 2000 ====looking for the answer choices 100^2/40 != 2000!!! where am I wrong? Today it seems I am back to square 1 Ravi Hi, the correct way is-- whenever amount is compounded other than annually, reduce the interest that many time and increase the time period that many times.. lets see in this Q.. it is semi annually that is twice in a year... so our time becomes 2n and rate of interest = r/2.. 1) when annually Amount =$$1000( 1+\frac{r}{100})^1 = 1000(1+\frac{r}{100})$$ 2) when semi annually $$1000( 1+\frac{r}{2*100})^2 = 1000(1+\frac{r}{200}^2)+r/100$$ subtract 1 from 2.. $$1000( 1+\frac{r}{2*100})^2 = 1000(1+\frac{r}{200}^2+\frac{r}{100} - 1000( 1+\frac{r}{100})^1$$.. $$1000(1+\frac{r}{200}^2+\frac{r}{100}-(1+\frac{r}{100})$$.. $$1000(\frac{r}{200}^2)$$ = $$r^2/40$$ D Hi Chetan, Could you please tell me how did you deduce the second condition where it says semi annually.. It seems you have seperated r/100. I couldn't figure out how ? Manager Joined: 26 Mar 2016 Posts: 58 Own Kudos [?]: 53 [17] Given Kudos: 61 Location: Greece GMAT 1: 710 Q51 V34 GPA: 2.9 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
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1,000 compounded Anually(x/100 rate): 1,000*x/100=10x(1)

1,000 compounded Semi-anually (x/200 rate): 1,000*x/200=5x 1st 6-month period

(1,000+5x)*x/200=5x +x^2/40 2nd 6-month period. So total 5x+5x+x^2/40=10x+x^2/40(2)

So (2)-(1)=10x+x^2/40-10x= x^2/40 Ans. (D)
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Re: How much more interest will maria receive if she invests 1000$for one [#permalink] FightToSurvive wrote: How much more interest will maria receive if she invests 1000$ for one year at x % annual interest, compounded semianually, than if she invest 1000$for one year at x percent annual interest, compounded annually? a> 5x b> 10x c> x^2/20 d> x^2/40 e>10x+ (x^2/40) I dont from what source these questions are from. See from simplification sake, take x =10% (i) investing 1000$ for one year at x % annual interest, compounded semiannually
1000*1.1*1.1=1210
Interest amount = 1210-1000=210
(ii)investing 1000$for one year at x percent annual interest, compounded annually 1000*1.1=1100 Interest amount = 1100-1000=100 Difference in two cases = 210-100 = 110 Putting x=10 in the above option , none of them give 110 as an answer. Could kindly check the options you have posted as it cannot be D as you given the OA. Your figure for the annual interest is incorrect. Is should be 20%. This gives 200 interest on a principle of 1000 versus interest of 210 when compounded semi-annually. D gives 10. Intern Joined: 21 Jun 2016 Posts: 4 Own Kudos [?]: 1 [0] Given Kudos: 7 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
I can't quite wrap my head around the semi annual and quarterly compounding interest.

I tried the following, but ended up with "A" as my answer:

Let X percent be 200

Semi-Annual = 1000(1+200/2*100)^2 == > 1000(2)^2 ==> 4,000

Then interest for semi-annual should equal $3,000 Annual = 1000(1+200/100)^1 Then interest for annual should equal$2,000

Difference in interest is $1,000. Given X = 200, why isn't A correct? Intern Joined: 14 Aug 2017 Posts: 10 Own Kudos [?]: 2 [1] Given Kudos: 9 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
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I have a question about gmat intrests- this question doesnt mention simple intrest or not. should i assume that?
because, lets say 10% intrest annualy- isnt 5% semi annualy as the question implies but 4.88 %. 1000*1.0488=1048.8 for the first half a year and 1048.8*1.048 for the second equels= 1100. which equals to 10%.
so actually on the first 30 seconds I tried to look if there is an answer that says- 0. or after few calculation says it, and look for a sentence that would clear that issue.

so, are we suppose to assume simple intrest?
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Re: How much more interest will maria receive if she invests 1000$for one [#permalink] Expert Reply lpardess wrote: I have a question about gmat intrests- this question doesnt mention simple intrest or not. should i assume that? because, lets say 10% intrest annualy- isnt 5% semi annualy as the question implies but 4.88 %. 1000*1.0488=1048.8 for the first half a year and 1048.8*1.048 for the second equels= 1100. which equals to 10%. so actually on the first 30 seconds I tried to look if there is an answer that says- 0. or after few calculation says it, and look for a sentence that would clear that issue. so, are we suppose to assume simple intrest? Hi lpardess, Welcome to GMATClub :) First of all, notice that this question contains the word "compounded". So, whenever you see "compounded" word in your question, it has to be compound interest. If not, take it as simple interest. Does that make sense? Intern Joined: 14 Aug 2017 Posts: 10 Own Kudos [?]: 2 [0] Given Kudos: 9 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
Hi
thank for the answer, I thought i responded earlier but I guess my post wasnt sent. so Ill post again.

I probobly didnt explain well what I mean by simple interest, while yes compounded means not simple, but still that doesnt resolve my problem with the question.

as i wrote on my example, lets say 10% interest annually - isnt 5% semi annually but 4.88 %. 1000*1.0488=1048.8 for the first half a year and 1048.8*1.048 for the second equels= 1100. meaning 10% annual interest.
the question asks about X% annually . but the actual annual interest is different by the answer.

X percent annual interest is X percent. doesnt mattar if its compounded annually , semiannually or every month.
so the correct answer should be 0. at least in real life. are the gmat rules different for interest?
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Re: How much more interest will maria receive if she invests 1000$for one [#permalink] 3 Kudos 1 Bookmarks I believe this question can be handled in max 20 sec without getting into much formulas.. If you think about it, the difference is going to be nothing but the interest for last 6 months on the interest of first 6 months.. Interest of first 6 months = ((1000/100)*(x/2)) = 5x Difference = ((5x/100)*(x/2)) = x^2/40 Re: How much more interest will maria receive if she invests 1000$ for one [#permalink]
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