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

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Manager
Joined: 23 Jan 2008
Posts: 108

Kudos [?]: 98 [0], given: 0

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

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01 Feb 2008, 14:08
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John deposited \$10,000 to open a new savings account that earned 4% 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?

1. \$10,000
2. \$10,101
3. \$10,200
4. \$10,201
5. \$10,400

Kudos [?]: 98 [0], given: 0

CEO
Joined: 21 Jan 2007
Posts: 2734

Kudos [?]: 1076 [0], given: 4

Location: New York City

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01 Feb 2008, 14:12
blog wrote:
John deposited \$10,000 to open a new savings account that earned 4% 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?

1. \$10,000
2. \$10,101
3. \$10,200
4. \$10,201
5. \$10,400

FV = PV ( 1 + i/n)^nt
FV = 10000(1+ .04/4)^2(1)
4
_________________

You tried your best and you failed miserably. The lesson is 'never try'. -Homer Simpson

Kudos [?]: 1076 [0], given: 4

CEO
Joined: 29 Mar 2007
Posts: 2553

Kudos [?]: 528 [0], given: 0

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01 Feb 2008, 14:28
blog wrote:
John deposited \$10,000 to open a new savings account that earned 4% 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?

1. \$10,000
2. \$10,101
3. \$10,200
4. \$10,201
5. \$10,400

I=P(1+r/n)^nt --> I=10000(1+.04/4)^4(1/2) ---> 10000(1+.01)^2 -->

1.01*1.01 = 1.021 so 10000*1.02 --> 10201

Please note this is a problem in which you have to pay attention to the answer choices. C and D are very close so you can't really afford to do any aproximation here.

Kudos [?]: 528 [0], given: 0

Senior Manager
Joined: 26 Jan 2008
Posts: 263

Kudos [?]: 123 [0], given: 16

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01 Feb 2008, 14:48
blog wrote:
John deposited \$10,000 to open a new savings account that earned 4% 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?

1. \$10,000
2. \$10,101
3. \$10,200
4. \$10,201
5. \$10,400

(D)

original amount, P = 10000
4% annual compound interest = 1% quarterly compound interest
After 1 quarter, P = 10000 + (1% of 10000) = 10100 [This is the new principal.. since interest is compounded quarterly]
After 2 quarters, P = 10100 + (1% of 10100) = 10201
_________________

Kudos [?]: 123 [0], given: 16

Re: john   [#permalink] 01 Feb 2008, 14:48
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# John deposited \$10,000 to open a new savings account that

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