Author 
Message 
TAGS:

Hide Tags

Manager
Joined: 19 Aug 2007
Posts: 194

If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
23 Jun 2008, 10:38
Question Stats:
57% (00:32) correct 43% (00:28) wrong based on 1091 sessions
HideShow timer Statistics
If $10,000 is invested at x percent simple annual interest for n years, which of the following represents the total amount of interest, in dollars, that will be earned by this investment in the n years? A. 10,000(x^n) B. 10,000(x/100)^n C. 10,000n(x/100) D. 10,000(1+x/100)^n E. 10,000n(1+x/100)
Official Answer and Stats are available only to registered users. Register/ Login.



Director
Joined: 23 Sep 2007
Posts: 761

Re: PS  Simple annual interest [#permalink]
Show Tags
23 Jun 2008, 10:45
C
I = P R T
The tricky part is to recognize x/100 is the rate.
GMAT people love this particular nomenclature for some reason. When they say "x percent" they want the math to be express as x/100. For most of us (me at least), When I see x percent (ex: 50 percent), I see .5 and see no need to express it as .5/100. I have countless wrong answers due to this 1 technicality.



Manager
Joined: 11 Apr 2008
Posts: 128
Location: Chicago

Re: PS  Simple annual interest [#permalink]
Show Tags
Updated on: 23 Jun 2008, 10:56
gmat blows wrote: I know this problem may seem easy to the business savy people...but as an engineer, I dont know any of these formulas...
If $10,000 is invested at x percent simple annual interest for n years, which of the following represents the total amount of interest, in dollars, that will be earned by this investment in the n years? A) 10,000(x^n) B) 10,000(x/100)^n C) 10,000n(x/100) D) 10,000(1+x/100)^n E) 10,000n(1+x/100)
 This is a GMATPrep question and I'm surprised that GMAT would just ask such a direct question as asking to regurgitate a formula  is there a trick to this that I did not pick up on?? BTW, I picked D (I swear, I've seen that formula floating around...but apparently I'm wrong)
thanks. C The reasoning is from the following: The formula for simple rate of interest is F = P(1+rt) where F = future value P = present value r = rate t = time We can substitute x for r n for t and 10,000 in for P F = 10,000(1+xn)This formula will tell you the principal (original amount invested) + interest, but we only want interest, so the "1+" portion of the formula in unecessary. > F = 10,000(xn)Now, we need to get the x into terms of a percentage, so we divide x by 100 > F = 10,000(n * x/100)If we move the n outisde the brackets, we get > F = 10,000n(x/100) > C
_________________
Factorials were someone's attempt to make math look exciting!!!
Originally posted by brokerbevo on 23 Jun 2008, 10:48.
Last edited by brokerbevo on 23 Jun 2008, 10:56, edited 4 times in total.



SVP
Joined: 30 Apr 2008
Posts: 1841
Location: Oklahoma City
Schools: Hard Knocks

Re: PS  Simple annual interest [#permalink]
Show Tags
23 Jun 2008, 10:50
The answer is D. Gmatnub  you forgot to raise it to the n number of years. (disregard this) Guess it's C. I was thinking simple is compounded annually rather than monthly, but it's not compounded at all. Quote: It take a big man to admit when he's wrong. It takes an even bigger man to laugh at that man for being wrong. gmat blows wrote: I know this problem may seem easy to the business savy people...but as an engineer, I dont know any of these formulas...
If $10,000 is invested at x percent simple annual interest for n years, which of the following represents the total amount of interest, in dollars, that will be earned by this investment in the n years? A) 10,000(x^n) B) 10,000(x/100)^n C) 10,000n(x/100) D) 10,000(1+x/100)^n E) 10,000n(1+x/100)
 This is a GMATPrep question and I'm surprised that GMAT would just ask such a direct question as asking to regurgitate a formula  is there a trick to this that I did not pick up on?? BTW, I picked D (I swear, I've seen that formula floating around...but apparently I'm wrong)
thanks.
_________________
 J Allen Morris **I'm pretty sure I'm right, but then again, I'm just a guy with his head up his a$$.
GMAT Club Premium Membership  big benefits and savings



Manager
Joined: 19 Aug 2007
Posts: 194

Re: PS  Simple annual interest [#permalink]
Show Tags
23 Jun 2008, 16:19
thanks, OA is C.
missed the point that it was only asking for interest, not the TOTAL (principal + interest)



Intern
Joined: 10 Jan 2008
Posts: 39

Re: PS  Simple annual interest [#permalink]
Show Tags
24 Sep 2008, 15:39
I used the plug in method.
If X = 10 and n = 2, after one year 1,000 dollars in interest will be earned (11,000 total). After the second year, 1,100 dollars in interest will be earned (12,100 total in account). Interest earned = 12,100  10,000 = 2,100.
A quick scan of the answer choices (plugging in X= 10 and n = 2) tells you that only C is close to 2100, and is the answer.
But C = 10000 (2) (.1) = 2000. This is Slightly less than the 2100 I got above.
I wonder if the plug in method is an estimation, or if I screwed up the math somewhere. In any event, the plug in method is good when you have no idea what formula is correct or when you have no idea how to solve the algebra.



Manager
Joined: 14 Jun 2012
Posts: 56

Re: I know this problem may seem easy to the business savy [#permalink]
Show Tags
30 Jul 2012, 16:14
I encountered this problem recently on a GMATPrep test. I used the plugging in method and went wrong. I made a silly mistake which I realized while looking at the OA but did not realize it when actually solving the problem. Let the rate of interest = 10% hence I plugged in x as (10/100) in the answer choices and hence ended up with choice A which was wrong. I should have taken x as it is i.e. x=10 instead of x/100. The x percent took me for a ride here. Overall, thinking back, this was a straightforward Simple Interest formula problem i.e. Simple Interest = (Principal*Number Of Years*Rate of interest)/100 i.e. (PNR)/100
_________________
My attempt to capture my BSchool Journey in a Blog : tranquilnomadgmat.blogspot.com
There are no shortcuts to any place worth going.



Intern
Joined: 02 Sep 2013
Posts: 17
Location: Indonesia
Concentration: Technology, Entrepreneurship
GMAT 1: 640 Q50 V27 GMAT 2: 670 Q49 V34
GPA: 3.27
WE: Operations (Telecommunications)

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
11 Mar 2014, 02:41
dear all,
so if the formula for simple interest rate is I = P * R * T then what is the name / kind of interest rate with formula F = P ( 1+R/100 )^T ??
now am confused in which problem i should use either formula.
thanks in advance!



SVP
Status: The Best Or Nothing
Joined: 27 Dec 2012
Posts: 1837
Location: India
Concentration: General Management, Technology
WE: Information Technology (Computer Software)

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
11 Mar 2014, 03:34
sayno wrote: dear all,
so if the formula for simple interest rate is I = P * R * T then what is the name / kind of interest rate with formula F = P ( 1+R/100 )^T ??
now am confused in which problem i should use either formula.
thanks in advance! That's the compound interest formula
_________________
Kindly press "+1 Kudos" to appreciate



Intern
Joined: 23 Sep 2014
Posts: 14

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
17 Dec 2014, 05:26
tamg08 wrote: I used the plug in method.
If X = 10 and n = 2, after one year 1,000 dollars in interest will be earned (11,000 total). After the second year, 1,100 dollars in interest will be earned (12,100 total in account). Interest earned = 12,100  10,000 = 2,100.
A quick scan of the answer choices (plugging in X= 10 and n = 2) tells you that only C is close to 2100, and is the answer.
But C = 10000 (2) (.1) = 2000. This is Slightly less than the 2100 I got above.
I wonder if the plug in method is an estimation, or if I screwed up the math somewhere. In any event, the plug in method is good when you have no idea what formula is correct or when you have no idea how to solve the algebra. Tried this too but just like you said it comes down to 2000 and not 2100. Almost seems like the formula doesnt work to me?



Intern
Joined: 24 Aug 2015
Posts: 23
Location: Israel
GPA: 3.32

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
01 Oct 2015, 11:32
JoostGrijsen wrote: tamg08 wrote: I used the plug in method.
If X = 10 and n = 2, after one year 1,000 dollars in interest will be earned (11,000 total). After the second year, 1,100 dollars in interest will be earned (12,100 total in account). Interest earned = 12,100  10,000 = 2,100.
A quick scan of the answer choices (plugging in X= 10 and n = 2) tells you that only C is close to 2100, and is the answer.
But C = 10000 (2) (.1) = 2000. This is Slightly less than the 2100 I got above.
I wonder if the plug in method is an estimation, or if I screwed up the math somewhere. In any event, the plug in method is good when you have no idea what formula is correct or when you have no idea how to solve the algebra. Tried this too but just like you said it comes down to 2000 and not 2100. Almost seems like the formula doesnt work to me? Same here. Luckily, I had first plugedin x=10, n=1. Thus, narrowing the possibilities to B(=1000) and C(=1000). Using n=2 on B and C alone, made C to appear stronger, even if it havn't given me the correct answer.



Manager
Joined: 15 Feb 2015
Posts: 110

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
03 Oct 2015, 04:59
sayno wrote: dear all,
so if the formula for simple interest rate is I = P * R * T then what is the name / kind of interest rate with formula F = P ( 1+R/100 )^T ??
now am confused in which problem i should use either formula.
thanks in advance! Compound interest formula is Principal * (1+ ( Rate/C) * Time^C C= Number of times the principal is compounded ( if the problem says compounded quarterly, then C=4)



Intern
Joined: 10 May 2013
Posts: 7

If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
14 Oct 2015, 09:40
shouldn't the answer be 10000(1+x/100)?
question says that simple interest is x percent for n years. As I see it, rate is x percent per total number of years, not x percent per 1 year, so we shall not nultiply rate by n.
So, total sum =10000(1+x/100) Amount of interest = 10000(1 + x/100)  10000 = 10000( 1 + x/100  1) = 10000(1+x/100).
is wording of this particular question wordy or am I wrong in comprehension?



Current Student
Joined: 20 Mar 2014
Posts: 2643
Concentration: Finance, Strategy
GPA: 3.7
WE: Engineering (Aerospace and Defense)

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
14 Oct 2015, 09:56
alexeykaplin wrote: shouldn't the answer be 10000(1+x/100)?
question says that simple interest is x percent for n years. As I see it, rate is x percent per total number of years, not x percent per 1 year, so we shall not nultiply rate by n.
So, total sum =10000(1+x/100) Amount of interest = 10000(1 + x/100)  10000 = 10000( 1 + x/100  1) = 10000(1+x/100).
is wording of this particular question wordy or am I wrong in comprehension? No. You are over analysing the question. Couple of things: 1, This is a GMATPREP question and as such you should not question the wording or the solution. 2. For simple interest problems it is x% for n years and it means that for all the 'n' # of years, the rate will be constant at x%. It is not x/n % for 1 year as you are mentioning above. Thus, the SI on 10000 $ = 10000*x*n/100. Hope this helps.



Manager
Joined: 23 Sep 2015
Posts: 87
Concentration: General Management, Finance
GMAT 1: 680 Q46 V38 GMAT 2: 690 Q47 V38
GPA: 3.5

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
04 Nov 2015, 12:44
I got confused with this question
I think answer D is for compound interest (which i assumed)
and answer C is for simple interest because it is not compounding.
Is this reasoning correct?



Current Student
Joined: 20 Mar 2014
Posts: 2643
Concentration: Finance, Strategy
GPA: 3.7
WE: Engineering (Aerospace and Defense)

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
04 Nov 2015, 12:51
GMATDemiGod wrote: I got confused with this question
I think answer D is for compound interest (which i assumed)
and answer C is for simple interest because it is not compounding.
Is this reasoning correct? In GMAT Interest questions, any compounded interest problem will specifically mention that the interest is compounded. If no such thing is mentined, then assume that it is a simple interest problem.



Math Expert
Joined: 02 Sep 2009
Posts: 46191

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
05 Nov 2015, 01:15



Manager
Joined: 10 May 2014
Posts: 141

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
25 Dec 2015, 08:22
A different, less elegant, yet more straightforward approach: Forget about formulas and plug in numbers.  Capital: $10,000  X = assume 5%  N = assume 1 year Question: "Which of the following represents the total amount of interest, in dollars, that will be earned by this investment in the n years?" In other words, the answer should yield $500 (this is your target number) Find the answer choice that yields this target number when x = 5 and n = 1. Answer choice C is the correct answer.
_________________
Consider giving me Kudos if I helped, but don´t take them away if I didn´t!
What would you do if you weren´t afraid?



NonHuman User
Joined: 09 Sep 2013
Posts: 7006

Re: If $10,000 is invested at x percent simple annual interest [#permalink]
Show Tags
22 Jan 2018, 09:12
Hello from the GMAT Club BumpBot! Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up  doing my job. I think you may find it valuable (esp those replies with Kudos). Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________
GMAT Books  GMAT Club Tests  Best Prices on GMAT Courses  GMAT Mobile App  Math Resources  Verbal Resources




Re: If $10,000 is invested at x percent simple annual interest
[#permalink]
22 Jan 2018, 09:12






