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# If \$1000 is deposited in a certain bank account and remains

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Senior Manager
Joined: 17 Oct 2006
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If \$1000 is deposited in a certain bank account and remains [#permalink]

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09 Dec 2006, 09:43
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If \$1000 is deposited in a certain bank account and remains in the account along with any accumulated interest, the dollar amount of interest,I, earned by the deposit in the first 'n' years is given by the formula I= 1000[(1+r/100)^n-1] where r is the annual rate of interest paid by the bank. Is the annual interest rate paid by the bank is greater than 8 %

1) The deposit earns a total of \$210 in interest in the first two year
2) (1+r/100)^2>1.15

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Senior Manager
Joined: 20 Feb 2006
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09 Dec 2006, 11:23
A) for me

From 1) We know the interest earned and the initial amount so can calculate interest rate.

From 2) Taking sq root of 1.15 is <8% So interest rate could be 7.5% or 20%
INSUFF

Kudos [?]: 33 [0], given: 0

Senior Manager
Joined: 17 Oct 2006
Posts: 432

Kudos [?]: 29 [0], given: 0

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09 Dec 2006, 12:31
A) for me

From 1) We know the interest earned and the initial amount so can calculate interest rate.

From 2) Taking sq root of 1.15 is <8% So interest rate could be 7.5% or 20%
INSUFF

I didn't get ur second point. Could you plz explain it a bit more? thanks

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Senior Manager
Joined: 20 Feb 2006
Posts: 373

Kudos [?]: 33 [0], given: 0

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09 Dec 2006, 18:24
arjsingh1976 wrote:
A) for me

From 1) We know the interest earned and the initial amount so can calculate interest rate.

From 2) Taking sq root of 1.15 is <8% So interest rate could be 7.5% or 20%
INSUFF

I didn't get ur second point. Could you plz explain it a bit more? thanks

Second statement is: 2) (1+r/100)^2>1.15

Take root of both sides = (1+r/100) > 1.072 (approx)

Therefore interest could be 7.5%, 8% or higher - insufficient info to answer question.

Is that ok?

Kudos [?]: 33 [0], given: 0

09 Dec 2006, 18:24
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