It is currently 21 Feb 2018, 15:05

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

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

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

If interest on a savings account is paid monthly at an annual rate of

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

Hide Tags

Math Expert
Joined: 02 Sep 2009
Posts: 43853
If interest on a savings account is paid monthly at an annual rate of [#permalink]

Show Tags

06 Feb 2018, 02:12
Expert's post
1
This post was
BOOKMARKED
00:00

Difficulty:

(N/A)

Question Stats:

86% (00:54) correct 14% (00:39) wrong based on 28 sessions

HideShow timer Statistics

If interest on a savings account is paid monthly at an annual rate of 25/4 percent and if the interest is not reinvested, then in how many years will the total amount of interest earned equal the amount of money saved in the account?

(A) 36

(B) 24

(C) 18

(D) 16

(E) 12
[Reveal] Spoiler: OA

_________________
BSchool Forum Moderator
Joined: 26 Feb 2016
Posts: 2061
Location: India
GPA: 3.12
If interest on a savings account is paid monthly at an annual rate of [#permalink]

Show Tags

06 Feb 2018, 02:31
1
KUDOS
1
This post was
BOOKMARKED
Bunuel wrote:
If interest on a savings account is paid monthly at an annual rate of 25/4 percent and if the interest is not reinvested, then in how many years will the total amount of interest earned equal the amount of money saved in the account?

(A) 36

(B) 24

(C) 18

(D) 16

(E) 12

Since the annual rate is $$\frac{25}{4}$$ percent,
we will recover $$\frac{25}{4}*\frac{1}{100} = \frac{25}{400} = \frac{1}{16}$$th of the total money invested every year.

Since, the interest is not re-invested, it will take 16 years to recover the amount such that
the total amount of interest earned is equal to amount of money invested.(Option D)
_________________

Stay hungry, Stay foolish

Class of 2020: Rotman Thread | Schulich Thread
Class of 2019: Sauder Thread

examPAL Representative
Joined: 07 Dec 2017
Posts: 165
Re: If interest on a savings account is paid monthly at an annual rate of [#permalink]

Show Tags

06 Feb 2018, 05:08
1
KUDOS
Expert's post
Bunuel wrote:
If interest on a savings account is paid monthly at an annual rate of 25/4 percent and if the interest is not reinvested, then in how many years will the total amount of interest earned equal the amount of money saved in the account?

(A) 36

(B) 24

(C) 18

(D) 16

(E) 12

As the calculation looks straightforward, we'll just do it.
This is a Precise approach.

We receive 25/4 percent interest per year and are asked when this equals the bulk of our savings, or 100%.
So, we're asked to solve the equation (25/4)*x = 100
This gives x = (100*4)/25 = 4*4 = 16.
(D) is our answer.
_________________

David
Senior tutor at examPAL
Signup for a free GMAT course

Target Test Prep Representative
Status: Head GMAT Instructor
Affiliations: Target Test Prep
Joined: 04 Mar 2011
Posts: 1986
Re: If interest on a savings account is paid monthly at an annual rate of [#permalink]

Show Tags

08 Feb 2018, 15:40
Bunuel wrote:
If interest on a savings account is paid monthly at an annual rate of 25/4 percent and if the interest is not reinvested, then in how many years will the total amount of interest earned equal the amount of money saved in the account?

(A) 36

(B) 24

(C) 18

(D) 16

(E) 12

Because the interest earned is not reinvested, we can use the formula for simple interest: I = P x r x t, where P is the original amount invested, r is the interest rate, and t is the number of years.

We want to calculate the number of years it takes for the earned interest to equal the original principal invested, so we have P = P x r x t:.

P = P x (25/4)/(100) x t

1 = 25t/400

400 = 25t

16 = t

_________________

Jeffery Miller
Head of GMAT Instruction

GMAT Quant Self-Study Course
500+ lessons 3000+ practice problems 800+ HD solutions

Intern
Joined: 21 Jan 2018
Posts: 9
Re: If interest on a savings account is paid monthly at an annual rate of [#permalink]

Show Tags

10 Feb 2018, 04:26
Bunuel wrote:
If interest on a savings account is paid monthly at an annual rate of 25/4 percent and if the interest is not reinvested, then in how many years will the total amount of interest earned equal the amount of money saved in the account?

(A) 36

(B) 24

(C) 18

(D) 16

(E) 12

Option D

Given : Interest =Amount
=> $$\frac{PRT}{100}=P$$
=> $$\frac{25T}{4*100}=1$$
=> T =16 Years
Re: If interest on a savings account is paid monthly at an annual rate of   [#permalink] 10 Feb 2018, 04:26
Display posts from previous: Sort by

If interest on a savings account is paid monthly at an annual rate of

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

 Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.