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# If $10,000 is invested at x percent simple annual interest for n years SORT BY: Tags: Show Tags Hide Tags Manager Joined: 19 Aug 2007 Posts: 113 Own Kudos [?]: 587 [140] Given Kudos: 0 Most Helpful Reply Intern Joined: 11 Apr 2008 Posts: 47 Own Kudos [?]: 202 [22] Given Kudos: 0 Location: Chicago Senior Manager Joined: 23 Sep 2007 Posts: 398 Own Kudos [?]: 1510 [11] Given Kudos: 0 General Discussion VP Joined: 30 Apr 2008 Posts: 1230 Own Kudos [?]: 951 [1] Given Kudos: 32 Location: Oklahoma City Concentration: Life Schools:Hard Knocks Q47 V42 Re: If$10,000 is invested at x percent simple annual interest for n years [#permalink]
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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. Manager Joined: 19 Aug 2007 Posts: 113 Own Kudos [?]: 587 [2] Given Kudos: 0 Re: If$10,000 is invested at x percent simple annual interest for n years [#permalink]
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thanks, OA is C.

missed the point that it was only asking for interest, not the TOTAL (principal + interest)
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] 7 Kudos 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. Intern Joined: 14 Jun 2012 Posts: 10 Own Kudos [?]: 25 [0] Given Kudos: 1 Re: If$10,000 is invested at x percent simple annual interest for n years [#permalink]
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
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] 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 Joined: 27 Dec 2012 Status:The Best Or Nothing Posts: 1562 Own Kudos [?]: 7207 [0] Given Kudos: 193 Location: India Concentration: General Management, Technology WE:Information Technology (Computer Software) Re: If$10,000 is invested at x percent simple annual interest for n years [#permalink]
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
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] 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: 22 Own Kudos [?]: 11 [0] Given Kudos: 11 Location: Israel GMAT 1: 740 Q49 V41 GPA: 3.32 Re: If$10,000 is invested at x percent simple annual interest for n years [#permalink]
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 pluged-in 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.
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] 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: 5 Own Kudos [?]: [0] Given Kudos: 176 Re: If$10,000 is invested at x percent simple annual interest for n years [#permalink]
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?
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] 2 Kudos alexeykaplin wrote: shouldn't the answer be 10000(1+x/100)? question says that simple interest is x percent for n years. As I see it, rate is x percent per total number of years, not x percent per 1 year, so we shall not nultiply rate by n. So, total sum =10000(1+x/100) Amount of interest = 10000(1 + x/100) - 10000 = 10000( 1 + x/100 - 1) = 10000(1+x/100). is wording of this particular question wordy or am I wrong in comprehension? No. You are over analysing the question. Couple of things: 1, This is a GMATPREP question and as such you should not question the wording or the solution. 2. For simple interest problems it is x% for n years and it means that for all the 'n' # of years, the rate will be constant at x%. It is not x/n % for 1 year as you are mentioning above. Thus, the SI on 10000$ = 10000*x*n/100.

Hope this helps.
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] 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? SVP Joined: 20 Mar 2014 Posts: 2362 Own Kudos [?]: 3626 [3] Given Kudos: 816 Concentration: Finance, Strategy GMAT 1: 750 Q49 V44 GPA: 3.7 WE:Engineering (Aerospace and Defense) Re: If$10,000 is invested at x percent simple annual interest for n years [#permalink]
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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.
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] 3 Bookmarks Expert Reply 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? Percentages, Interest and More Compound Interest Problems from our Special Questions Directory. Theory on Percent and Interest Problems DS Percent and Interest Problems PS Percent and Interest Problems Hope it helps. Manager Joined: 10 May 2014 Posts: 116 Own Kudos [?]: 339 [3] Given Kudos: 28 Re: If$10,000 is invested at x percent simple annual interest for n years [#permalink]
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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.
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] 2 Kudos I don't understand why people are even resorting to such time consuming methods as plugging numbers. The question is simply asking simple interest earned at n years. Simple interest formula is SI=pnr/100 P=principal n=years r=rate of interest P=10,000 r=X SI= 10,000*n* X/100 I guess most of the attempters over read and got in the GMAT trap. The "annual" word has no bearing whatsoever on the answer. The question clearly states SIMPLE INTEREST. Posted from my mobile device VP Joined: 14 Feb 2017 Posts: 1115 Own Kudos [?]: 2162 [0] Given Kudos: 368 Location: Australia Concentration: Technology, Strategy GMAT 1: 560 Q41 V26 GMAT 2: 550 Q43 V23 GMAT 3: 650 Q47 V33 GMAT 4: 650 Q44 V36 GMAT 5: 600 Q38 V35 GMAT 6: 710 Q47 V41 WE:Management Consulting (Consulting) Re: If$10,000 is invested at x percent simple annual interest for n years [#permalink]
Simple interest formula = PRT => Principal * Rate * time

If you treat time as a power you're essentially determining the total interest to the power of n, but you would still need to deduct the principal.
Re: If \$10,000 is invested at x percent simple annual interest for n years [#permalink]
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