GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 10 Dec 2019, 14:44

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

If $1000 is placed into account X, yielding 10% interest compounded an

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

Find Similar Topics 
Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 59634
If $1000 is placed into account X, yielding 10% interest compounded an  [#permalink]

Show Tags

New post 02 Aug 2018, 00:21
00:00
A
B
C
D
E

Difficulty:

  55% (hard)

Question Stats:

66% (02:37) correct 34% (02:11) wrong based on 68 sessions

HideShow timer Statistics

Retired Moderator
User avatar
D
Joined: 30 Jan 2015
Posts: 789
Location: India
Concentration: Operations, Marketing
GPA: 3.5
Re: If $1000 is placed into account X, yielding 10% interest compounded an  [#permalink]

Show Tags

New post 02 Aug 2018, 02:52
S.I = P*T*R / 100 = 1000 * 5 * 0.1 = 500
C.I = P*( 1 + R/100 )^nt - P = 1000 * ( 1 + 0.1 )^5 - 1000 = 1610.51 - 1000 = 610.51

C.I - S.I = 610.51 - 500 = 110.51

Hence, C.
_________________
The few, the fearless !

Thanks :-)
Senior PS Moderator
User avatar
V
Joined: 26 Feb 2016
Posts: 3302
Location: India
GPA: 3.12
Re: If $1000 is placed into account X, yielding 10% interest compounded an  [#permalink]

Show Tags

New post 02 Aug 2018, 03:30
1
Bunuel wrote:
If $1000 is placed into account X, yielding 10% interest compounded annually and $1000 is placed into account Y using 10% simple annual interest, how much more will be in account X than in account Y at the end of 5 years?  


A. $0
B. $100
C. $110.51
D. $133.31
E. $146.41


A simple interest of 10% every year will increase the principal by 0.1(x will become 1.1) in a year.
The principal will increase by the same time every year and becomes \(x + 5(0.1x) = 1.5x\) in 5 years.

On the contrary, the compound interest will be \(x*(1.1)^5 = x(1.331*1.21) = 1.61051x\)

The difference between the amount in account X and account Y is \(1.61051x - 1.5x = 0.11051x\)

Therefore, since the amount placed is $1000, there is 0.11051*1000 = $110.51(Option C) more in account X.
_________________
You've got what it takes, but it will take everything you've got
Intern
Intern
avatar
B
Joined: 22 May 2018
Posts: 8
Location: Korea, Republic of
GMAT ToolKit User
Re: If $1000 is placed into account X, yielding 10% interest compounded an  [#permalink]

Show Tags

New post 03 Oct 2018, 05:08
Bunuel wrote:
If $1000 is placed into account X, yielding 10% interest compounded annually and $1000 is placed into account Y using 10% simple annual interest, how much more will be in account X than in account Y at the end of 5 years?  


A. $0
B. $100
C. $110.51
D. $133.31
E. $146.41



Is there any way to solve this problem without calculating (1.1)5 ?
Most of the interest questions I've managed to solve it without much calculation. Wonder if this one could be solved in a different way.
Thanks!
Veritas Prep GMAT Instructor
User avatar
V
Joined: 16 Oct 2010
Posts: 9866
Location: Pune, India
Re: If $1000 is placed into account X, yielding 10% interest compounded an  [#permalink]

Show Tags

New post 03 Oct 2018, 06:19
2
Bunuel wrote:
If $1000 is placed into account X, yielding 10% interest compounded annually and $1000 is placed into account Y using 10% simple annual interest, how much more will be in account X than in account Y at the end of 5 years?  


A. $0
B. $100
C. $110.51
D. $133.31
E. $146.41



Approximate:

In 1st year, both interests will be the same at $100 each.
In 2nd year, CI will be $10 extra (10% interest on previous interest of $100)
In 3rd year, CI will be $21 extra (10% interest on previous interest of $100 + $110 = $210)

It's already obvious that the answer will be 110.51 (= 10 + 21 + approx (30 + a bit extra) + approx (40 + a bit extra)).

else calculate for last 2 years too.

In 4th year, CI will be $33 extra (10% interest on previous interest of $210 + $121 = $331)
In 5th year, CI will be $46 (10% interest on previous interest of $331 + $133 = $464)

Total extra = 10 + 21 + 33 + 46 = $110
_________________
Karishma
Veritas Prep GMAT Instructor

Learn more about how Veritas Prep can help you achieve a great GMAT score by checking out their GMAT Prep Options >
Senior Manager
Senior Manager
User avatar
B
Joined: 03 Sep 2018
Posts: 252
Location: Netherlands
GMAT 1: 710 Q48 V40
GMAT 2: 780 Q50 V49
GMAT 3: 760 Q49 V44
GPA: 4
Reviews Badge CAT Tests
Re: If $1000 is placed into account X, yielding 10% interest compounded an  [#permalink]

Show Tags

New post 17 Aug 2019, 09:40
VeritasKarishma wrote:
Bunuel wrote:
If $1000 is placed into account X, yielding 10% interest compounded annually and $1000 is placed into account Y using 10% simple annual interest, how much more will be in account X than in account Y at the end of 5 years?  


A. $0
B. $100
C. $110.51
D. $133.31
E. $146.41



Approximate:

In 1st year, both interests will be the same at $100 each.
In 2nd year, CI will be $10 extra (10% interest on previous interest of $100)
In 3rd year, CI will be $21 extra (10% interest on previous interest of $100 + $110 = $210)

It's already obvious that the answer will be 110.51 (= 10 + 21 + approx (30 + a bit extra) + approx (40 + a bit extra)).

else calculate for last 2 years too.

In 4th year, CI will be $33 extra (10% interest on previous interest of $210 + $121 = $331)
In 5th year, CI will be $46 (10% interest on previous interest of $331 + $133 = $464)

Total extra = 10 + 21 + 33 + 46 = $110


I don't fully understand how you get to YR3 interest. I thought the interest payments would be as follows

1st: 100
2nd: 100+10
3rd: 100+10+1
_________________
Good luck to you.
SVP
SVP
User avatar
D
Joined: 03 Jun 2019
Posts: 1881
Location: India
Premium Member Reviews Badge CAT Tests
If $1000 is placed into account X, yielding 10% interest compounded an  [#permalink]

Show Tags

New post 17 Aug 2019, 09:56
Bunuel wrote:
If $1000 is placed into account X, yielding 10% interest compounded annually and $1000 is placed into account Y using 10% simple annual interest, how much more will be in account X than in account Y at the end of 5 years?  


A. $0
B. $100
C. $110.51
D. $133.31
E. $146.41


Given: $1000 is placed into account X, yielding 10% interest compounded annually and $1000 is placed into account Y using 10% simple annual interest,

Asked: How much more will be in account X than in account Y at the end of 5 years?  

For simple interest account Y
Interest for 5 years = 1000 * 5 * 10% = $500
Balance in simple interest account Y after 5 years = $1500

For compound interest account X
Balance in compound interest account after 5 years = 1000 (1.1)^5 where 1.1^5 = 1.61051
Balance in compound interest account X after 5 years = 1000 (1.1)^5 = $1610.51

How much more will be in account X than in account Y at the end of 5 years = $1610.51 - $1500 = $110.51

IMO C 
GMAT Club Bot
If $1000 is placed into account X, yielding 10% interest compounded an   [#permalink] 17 Aug 2019, 09:56
Display posts from previous: Sort by

If $1000 is placed into account X, yielding 10% interest compounded an

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  





Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne