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# Jill invests \$10000 in an account that pays an annual rate

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Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4417

Kudos [?]: 8419 [2], given: 102

Jill invests \$10000 in an account that pays an annual rate [#permalink]

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24 Jan 2013, 18:09
2
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Expert's post
7
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Difficulty:

35% (medium)

Question Stats:

70% (01:24) correct 30% (01:44) wrong based on 278 sessions

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Jill invests \$10000 in an account that pays an annual rate of 3.96%, compounding semi-annually. Approximately how much does she have in her account after two years?

(A) \$10079.44
(B) \$10815.83
(C) \$12652.61
(D) \$14232.14
(E) \$20598.11

On the GMAT, you are not allowed to use a calculator, and yet the test can give you problems like this. It is so important to learn estimation skills that allow you to dispatch questions like this with simple arithmetic. For a full discussion of estimation strategies, as well as an analysis of this question, see:
http://magoosh.com/gmat/2012/the-power- ... mat-quant/

Mike
[Reveal] Spoiler: OA

_________________

Mike McGarry
Magoosh Test Prep

Last edited by Bunuel on 25 Jan 2013, 05:24, edited 1 time in total.
RENAMED THE TOPIC.

Kudos [?]: 8419 [2], given: 102

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Manager
Joined: 23 Jan 2013
Posts: 172

Kudos [?]: 56 [1], given: 41

Concentration: Technology, Other
Schools: Haas
GMAT Date: 01-14-2015
WE: Information Technology (Computer Software)
Re: Jill invests \$10000 in an account that pays an annual rate [#permalink]

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25 Jan 2013, 10:15
1
KUDOS
amount = principal * ( 1+ r/n) ^nt

Kudos [?]: 56 [1], given: 41

Intern
Joined: 27 Dec 2012
Posts: 12

Kudos [?]: 3 [3], given: 4

Re: Jill invests \$10000 in an account that pays an annual rate [#permalink]

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27 Jan 2013, 10:28
3
KUDOS
Very Simple question (I mean the options are very helpful)..

Let us consider interest rate as 4%. Therefore, in 6 months, the investment earns 200 dollars..

similarly...in next 6 months something more than 200 dollars...

therefore, in 2 years...10815 is the return..

Kudos [?]: 3 [3], given: 4

Manager
Joined: 12 Jan 2013
Posts: 57

Kudos [?]: 73 [1], given: 13

Location: United States (NY)
GMAT 1: 780 Q51 V47
GPA: 3.89
Re: Jill invests \$10000 in an account that pays an annual rate [#permalink]

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29 Jan 2013, 23:49
1
KUDOS
rohitgupta86 wrote:
Very Simple question (I mean the options are very helpful)..

Exactly! Forget the "semi-annually".
4% per year means 8% for two years. Answer B.
_________________

Sergey Orshanskiy, Ph.D.
I tutor in NYC: http://www.wyzant.com/Tutors/NY/New-York/7948121/#ref=1RKFOZ

Kudos [?]: 73 [1], given: 13

Current Student
Joined: 06 Sep 2013
Posts: 1980

Kudos [?]: 719 [0], given: 355

Concentration: Finance
Re: Jill invests \$10000 in an account that pays an annual rate [#permalink]

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14 Nov 2013, 16:50
mikemcgarry wrote:
Jill invests \$10000 in an account that pays an annual rate of 3.96%, compounding semi-annually. Approximately how much does she have in her account after two years?

(A) \$10079.44
(B) \$10815.83
(C) \$12652.61
(D) \$14232.14
(E) \$20598.11

On the GMAT, you are not allowed to use a calculator, and yet the test can give you problems like this. It is so important to learn estimation skills that allow you to dispatch questions like this with simple arithmetic. For a full discussion of estimation strategies, as well as an analysis of this question, see:
http://magoosh.com/gmat/2012/the-power- ... mat-quant/

Mike

I don't know how I got this wrong.

3.96% = 0.0396

Then 1.0396^4 (4 semesters in 2 years) * 10^4
Then (10*1.0396)^4
So you get (10.396^4) as the answer.
So answer should have 6 in last digit but I don't see any answer choice that fits the bill.

Any ideas?
Cheers!
J

Kudos [?]: 719 [0], given: 355

Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4417

Kudos [?]: 8419 [0], given: 102

Re: Jill invests \$10000 in an account that pays an annual rate [#permalink]

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14 Nov 2013, 17:04
jlgdr wrote:
mikemcgarry wrote:
Jill invests \$10000 in an account that pays an annual rate of 3.96%, compounding semi-annually. Approximately how much does she have in her account after two years?

(A) \$10079.44
(B) \$10815.83
(C) \$12652.61
(D) \$14232.14
(E) \$20598.11

On the GMAT, you are not allowed to use a calculator, and yet the test can give you problems like this. It is so important to learn estimation skills that allow you to dispatch questions like this with simple arithmetic. For a full discussion of estimation strategies, as well as an analysis of this question, see:
http://magoosh.com/gmat/2012/the-power- ... mat-quant/

Mike

I don't know how I got this wrong.

3.96% = 0.0396

Then 1.0396^4 (4 semesters in 2 years) * 10^4
Then (10*1.0396)^4
So you get (10.396^4) as the answer.
So answer should have 6 in last digit but I don't see any answer choice that fits the bill.

Any ideas?
Cheers!
J

Dear J,
What you thought was a clever approach, but you see, with money, folks always round everything to the nearest penny. That units digit might be in the tenths or hundreds or thousands of cent, so that just gets rounded off and does not appear in the monetary answers. In fact, three places after the decimal is the thousands place for the 6 in 10.396, so when we raise that to the fourth, the final 6 would be in the trillionth place, the 12th place after the decimal point. That's definitely a decimal place you will not see on your bank statement!
Does all this make sense?
Mike
_________________

Mike McGarry
Magoosh Test Prep

Kudos [?]: 8419 [0], given: 102

Current Student
Joined: 06 Sep 2013
Posts: 1980

Kudos [?]: 719 [0], given: 355

Concentration: Finance
Re: Jill invests \$10000 in an account that pays an annual rate [#permalink]

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27 Dec 2013, 08:11
mikemcgarry wrote:
jlgdr wrote:
mikemcgarry wrote:
Jill invests \$10000 in an account that pays an annual rate of 3.96%, compounding semi-annually. Approximately how much does she have in her account after two years?

(A) \$10079.44
(B) \$10815.83
(C) \$12652.61
(D) \$14232.14
(E) \$20598.11

On the GMAT, you are not allowed to use a calculator, and yet the test can give you problems like this. It is so important to learn estimation skills that allow you to dispatch questions like this with simple arithmetic. For a full discussion of estimation strategies, as well as an analysis of this question, see:
http://magoosh.com/gmat/2012/the-power- ... mat-quant/

Mike

I don't know how I got this wrong.

3.96% = 0.0396

Then 1.0396^4 (4 semesters in 2 years) * 10^4
Then (10*1.0396)^4
So you get (10.396^4) as the answer.
So answer should have 6 in last digit but I don't see any answer choice that fits the bill.

Any ideas?
Cheers!
J

Dear J,
What you thought was a clever approach, but you see, with money, folks always round everything to the nearest penny. That units digit might be in the tenths or hundreds or thousands of cent, so that just gets rounded off and does not appear in the monetary answers. In fact, three places after the decimal is the thousands place for the 6 in 10.396, so when we raise that to the fourth, the final 6 would be in the trillionth place, the 12th place after the decimal point. That's definitely a decimal place you will not see on your bank statement!
Does all this make sense?
Mike

Yeah got it Mike, that was very kind of you to clarify

Thanks

Cheers!
J

PS. I guess one can use simple interest to solve cause the answer choices are quite spread between you can easily arrive at something near 8%

Kudos [?]: 719 [0], given: 355

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Posts: 16764

Kudos [?]: 273 [0], given: 0

Re: Jill invests \$10000 in an account that pays an annual rate [#permalink]

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04 May 2015, 02:31
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Re: Jill invests \$10000 in an account that pays an annual rate [#permalink]

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19 Sep 2016, 18:31
Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Manager
Joined: 21 Jun 2015
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Location: India
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Re: Jill invests \$10000 in an account that pays an annual rate [#permalink]

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22 Sep 2017, 00:12
1
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amount = principal * ( 1+ r/n) ^nt

Kudos [?]: 27 [0], given: 28

Re: Jill invests \$10000 in an account that pays an annual rate   [#permalink] 22 Sep 2017, 00:12
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