It is currently 17 Dec 2017, 22:50

### 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
Your Progress

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

# John deposited \$10,000 to open a new savings account that

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

### Hide Tags

Math Expert
Joined: 02 Sep 2009
Posts: 42669

Kudos [?]: 136007 [2], given: 12723

John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

16 Jul 2012, 03:36
2
This post received
KUDOS
Expert's post
19
This post was
BOOKMARKED
00:00

Difficulty:

25% (medium)

Question Stats:

71% (01:02) correct 29% (01:17) wrong based on 1322 sessions

### HideShow timer Statistics

John deposited \$10,000 to open a new savings account that earned 4 percent annual interest, compounded quarterly. If there were no other transactions in the account, what was the amount of money in John's account 6 months after the account was opened?

(A) \$10,100
(8) \$10,101
(e) \$10,200
(D) \$10,201
(E) \$10,400

Diagnostic Test
Question: 21
Page: 23
Difficulty: 650
[Reveal] Spoiler: OA

_________________

Kudos [?]: 136007 [2], given: 12723

Intern
Joined: 11 Jul 2011
Posts: 19

Kudos [?]: 12 [1], given: 6

Location: India
Concentration: Entrepreneurship, Marketing
GMAT Date: 03-08-2013
WE: Manufacturing and Production (Manufacturing)
Re: John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

16 Jul 2012, 10:16
1
This post received
KUDOS
2
This post was
BOOKMARKED
john amount is compounded quarterly so the formula is A=P*(1+R/100)^N her p=principle R=rate of interest N=no of terms
rate of interest is 4% for a yr
so for quarter R=4/4=1%
john receive amt after 6 mnts so there are two quarter
so N=2
Amount A=P(1+R/100)^2
=10000(1+1/100)^2
=10000(1+0.01)^2
=10201

Kudos [?]: 12 [1], given: 6

Intern
Joined: 17 Jun 2012
Posts: 15

Kudos [?]: 2 [0], given: 0

GPA: 3.71
Re: John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

16 Jul 2012, 11:54
D.

SI = (P*R*T) / 100
SI after 1st Quarter: (10,000*4*3/12) /100 = 100
Principal for 2nd Quarter = 10,000+ 101 = 10100
SI after 2nd Quarter: (10,101*4*3/12) /100 = 101
Amount after 2nd Quarter (6 months) = 10100 +101 = 10,201

Kudos [?]: 2 [0], given: 0

Math Expert
Joined: 02 Sep 2009
Posts: 42669

Kudos [?]: 136007 [4], given: 12723

Re: John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

20 Jul 2012, 02:03
4
This post received
KUDOS
Expert's post
12
This post was
BOOKMARKED
SOLUTION

John deposited \$10,000 to open a new savings account that earned 4 percent annual interest, compounded quarterly. If there were no other transactions in the account, what was the amount of money in John's account 6 months after the account was opened?

(A) \$10,100
(8) \$10,101
(e) \$10,200
(D) \$10,201
(E) \$10,400

Approach #1:
4 percent annual interest compounded quarterly --> 1% in 3 moths.

For the first 3 moths interest was 1% of \$10,000, so \$100;
For the next 3 moths interest was 1% of \$10,000, plus 1% earned on previous interest of \$100, so \$100+\$1=\$101;

Total interest for 6 months was \$100+\$101=\$201, hence balance after 6 months was \$10,000+ \$201=\$10,201.

Answer: D.

Approach #2:
If the interest were compounded every 6 moths instead of every 3 months (quarterly) then in 6 months the interest would be 4%/2=2% of \$10,000, so \$200. Now, since the interest is compounded quarterly then there would be interest earned on interest (very small amount) thus the actual interest should be a little bit more than \$200, only answer choice D fits.

Answer: D.

Hope it's clear.
_________________

Kudos [?]: 136007 [4], given: 12723

Math Expert
Joined: 02 Sep 2009
Posts: 42669

Kudos [?]: 136007 [0], given: 12723

Re: John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

18 Oct 2013, 11:46
Expert's post
3
This post was
BOOKMARKED

Kudos [?]: 136007 [0], given: 12723

Director
Joined: 10 Mar 2013
Posts: 589

Kudos [?]: 496 [0], given: 200

Location: Germany
Concentration: Finance, Entrepreneurship
GMAT 1: 580 Q46 V24
GPA: 3.88
WE: Information Technology (Consulting)
Re: John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

23 May 2015, 05:05
10000*1,01*1,01 = 10201
_________________

When you’re up, your friends know who you are. When you’re down, you know who your friends are.

Share some Kudos, if my posts help you. Thank you !

800Score ONLY QUANT CAT1 51, CAT2 50, CAT3 50
GMAT PREP 670
MGMAT CAT 630
KAPLAN CAT 660

Kudos [?]: 496 [0], given: 200

Intern
Joined: 18 Jul 2015
Posts: 18

Kudos [?]: 2 [0], given: 36

Re: John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

18 Jul 2015, 16:15
I am new to the forum, starting on GMAT studying. I saw the solutions, but we are not using the calculator on test day so I do not understand thanks

Kudos [?]: 2 [0], given: 36

Senior Manager
Joined: 28 Jun 2015
Posts: 300

Kudos [?]: 112 [0], given: 47

Concentration: Finance
GPA: 3.5
Re: John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

18 Jul 2015, 20:16
Amount in John's A/c after 6 months = (\$10,000 * 1%) + [(\$10,000 * 1%) * 1%] = \$10,201. Ans (D).
_________________

I used to think the brain was the most important organ. Then I thought, look what’s telling me that.

Kudos [?]: 112 [0], given: 47

Intern
Joined: 18 Jan 2016
Posts: 23

Kudos [?]: 2 [0], given: 7

Re: John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

27 Jan 2016, 05:10
Bunuel wrote:
Approach #1:
4 percent annual interest compounded quarterly --> 1% in 3 months.

Although this is the method they are looking for, the question is poorly worded. By explicitly saying that 4% was earned, this implies that 4% was the effective rate, and not nominal.
Would have been better to say "the account earned a nominal annual interest rate of 4%". No more confusion.

Kudos [?]: 2 [0], given: 7

Non-Human User
Joined: 09 Sep 2013
Posts: 14783

Kudos [?]: 288 [0], given: 0

Re: John deposited \$10,000 to open a new savings account that [#permalink]

### Show Tags

13 Mar 2017, 08:04
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).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________

Kudos [?]: 288 [0], given: 0

Re: John deposited \$10,000 to open a new savings account that   [#permalink] 13 Mar 2017, 08:04
Display posts from previous: Sort by

# John deposited \$10,000 to open a new savings account that

 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®.