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01 Jan 2018, 01:36
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Difficulty:

45% (medium)

Question Stats:

63% (01:14) correct 38% (01:28) wrong based on 32 sessions

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If $600,000 is invested at 12% annual interest compounded monthly, what will be the total value of the investment after one quarter of the year? A.$672,000.00
B. $624,362.41 C.$618,180.60
D. $618,000.00 E.$606,000.00
[Reveal] Spoiler: OA

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Re: If $600,000 is invested at 12% annual interest compounded monthly, wha [#permalink] ### Show Tags 01 Jan 2018, 02:49 Bunuel wrote: If$600,000 is invested at 12% annual interest compounded monthly, what will be the total value of the investment after one quarter of the year?

A. $672,000.00 B.$624,362.41
C. $618,180.60 D.$618,000.00
E. $606,000.00 As the calculation looks a bit tricky, we'll estimate first. This is an Alternative approach. Let's say we had simple interest. 12% annual interest compounded monthly means 1% per month. Then the total interest after one quarter (= 3 months) would be 600,000*3% = 18,000 So our answer needs to be a bit more than 618,000. Most likely this is (C) and if we're short on time we should mark it and move on. To calculate fully we can write 1st month interest - 600,000 * 1% = 6,000 2nd month interest - 606,000 * 1% = 6,060 3nd month interest - 612,060 * 1% = 6,120.6 Giving 618,180.60 (C) is our answer. _________________ David Senior tutor at examPAL Signup for a free GMAT course We won some awards: Join our next webinar (free) Save up to$250 on examPAL packages (special for GMAT Club members)

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Re: If $600,000 is invested at 12% annual interest compounded monthly, wha [#permalink] ### Show Tags 01 Jan 2018, 08:10 Bunuel wrote: If$600,000 is invested at 12% annual interest compounded monthly, what will be the total value of the investment after one quarter of the year?

A. $672,000.00 B.$624,362.41
C. $618,180.60 D.$618,000.00
E. $606,000.00 Effective interest / Month = 1% Initial Principal = 600000 Amount after 1st Month = $$600000 + 600000*\frac{1}{12}*\frac{12}{100}$$ = $$606000$$ Amount after 2nd Month = $$606000 + 606000*\frac{1}{12}*\frac{12}{100}$$ = $$612060$$ Amount after 3rd Month = $$612060 + 612060*\frac{1}{12}*\frac{12}{100}$$ = $$618180.60$$ Thus, answer will be (C) 618180.60 _________________ Thanks and Regards Abhishek.... PLEASE FOLLOW THE RULES FOR POSTING IN QA AND VA FORUM AND USE SEARCH FUNCTION BEFORE POSTING NEW QUESTIONS How to use Search Function in GMAT Club | Rules for Posting in QA forum | Writing Mathematical Formulas |Rules for Posting in VA forum | Request Expert's Reply ( VA Forum Only ) Re: If$600,000 is invested at 12% annual interest compounded monthly, wha   [#permalink] 01 Jan 2018, 08:10
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