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James invested $5000 in scheme A for 1 year at a simple annual interes

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James invested $5000 in scheme A for 1 year at a simple annual interes  [#permalink]

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New post 27 Aug 2018, 03:43
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  35% (medium)

Question Stats:

74% (01:38) correct 26% (02:20) wrong based on 43 sessions

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James invested $5000 in scheme A for 1 year at a simple annual interest rate of 5% and invested another $10000 in scheme B for one year at an annual interest rate of 10% compounded semi-annually. What is the positive difference between the interest earned by James from scheme A and scheme B?

    A. 250
    B. 775
    C. 1025
    D. 1750
    E. 2000

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Re: James invested $5000 in scheme A for 1 year at a simple annual interes  [#permalink]

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New post 27 Aug 2018, 05:11
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EgmatQuantExpert wrote:
James invested $5000 in scheme A for 1 year at a simple annual interest rate of 5% and invested another $10000 in scheme B for one year at an annual interest rate of 10% compounded semi-annually. What is the positive difference between the interest earned by James from scheme A and scheme B?

    A. 250
    B. 775
    C. 1025
    D. 1750
    E. 2000

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Scheme A: $5,000 at 5% simple annual interest

5,000 * .05 * 1 = 5250 ----> $250 of interest


Scheme B: $10,000 at 10% compounded semi annually

10,000(1 + \(\frac{.1}{2}\))\(^2\) --------> 10,000(1.05)\(^2\) --------> 10,000(1.1025) = 11,025

$11,025 -----------> $1,025 of interest


Positive difference between the interest earned by Scheme A vs Scheme B

$1,025 - $250 = $775

Answer: B
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Re: James invested $5000 in scheme A for 1 year at a simple annual interes  [#permalink]

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New post 27 Aug 2018, 07:11
EgmatQuantExpert wrote:
James invested $5000 in scheme A for 1 year at a simple annual interest rate of 5% and invested another $10000 in scheme B for one year at an annual interest rate of 10% compounded semi-annually. What is the positive difference between the interest earned by James from scheme A and scheme B?

    A. 250
    B. 775
    C. 1025
    D. 1750
    E. 2000


\(Amount_{Si} = 5000 + \frac{5000*5*1}{100}\)

So, \(Amount_{Si} = 5250\)

\(Amount_{Ci} = 5000( 1 + \frac{10}{200})^{2}\)

So, \(Amount_{Ci} = 11025.00\)

So, the required difference is $1,025 - $250 = $775 , Answer must be (B)
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Re: James invested $5000 in scheme A for 1 year at a simple annual interes &nbs [#permalink] 27 Aug 2018, 07:11
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