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Joe deposited $6000 into an account. The interest was earned

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Senior Manager
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Joe deposited $6000 into an account. The interest was earned [#permalink]

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New post 25 Sep 2008, 15:08
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Joe deposited $6000 into an account. The interest was earned and reinvested quartertly. The compound interest for the first 3 quarters was 125, 130 and 145 respectively. What annual rate of intereset must the account earn for the fourth wuarter in order for the total interest earned on the accound for the year to be 10 percent of the initial deposit?
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Re: $6000 in the bank [#permalink]

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New post 25 Sep 2008, 15:41
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So we take 6000

subtract the interest amounts from Q1,2,3 = 400 from 600 (10% principle)

200= Q4 interest

6400*r*(1/4) = 200
6400r=800
r=12.5%


get it? got it? Good!

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Senior Manager
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Re: $6000 in the bank [#permalink]

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New post 26 Sep 2008, 13:57
great :) how many do u score in quant?

I learned how to solve this one using some pathethic formula but your approach is miracoulus
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New post 26 Sep 2008, 14:06
spiridon wrote:
great :) how many do u score in quant?

I learned how to solve this one using some pathethic formula but your approach is miracoulus



I agree that IM took the whole compound interest formula out of scope in his calculation. I guess the Q leads one astray by putting CI in there and toward the CI formula to do some thing. But as we saw, we dont need that.

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Re: $6000 in the bank   [#permalink] 26 Sep 2008, 14:06
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Joe deposited $6000 into an account. The interest was earned

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