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9
39 00:00

Difficulty:   45% (medium)

Question Stats: 59% (01:18) correct 41% (01:08) wrong based on 782 sessions

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7
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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...

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3
2
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.
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] ### Show Tags 1 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)

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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: 144

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6
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: 38

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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.

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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?
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Joined: 24 Aug 2015
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GMAT 1: 740 Q49 V41 GPA: 3.32

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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.

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: 6

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2
alexeykaplin wrote:

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: 79 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 for n years  [#permalink]

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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?
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Concentration: Finance, Strategy
Schools: Kellogg '18 (M)
GMAT 1: 750 Q49 V44 GPA: 3.7
WE: Engineering (Aerospace and Defense)

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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?

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: 135
Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] ### Show Tags 2 1 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. Director  P Joined: 20 Sep 2016 Posts: 648 Location: India Concentration: Strategy, Operations GPA: 3.92 WE: Operations (Consulting) Re: If$10,000 is invested at x percent simple annual interest for n years  [#permalink]

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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
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Re: If $10,000 is invested at x percent simple annual interest for n years [#permalink] ### Show Tags 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. _________________ Here's how I went from 430 to 710, and how you can do it yourself: https://www.youtube.com/watch?v=KGY5vxqMeYk&t= Re: If$10,000 is invested at x percent simple annual interest for n years   [#permalink] 10 Dec 2019, 00:43
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