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John opened a new account of fixed annual interested and

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Manager
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Joined: 30 Mar 2007
Posts: 173
John opened a new account of fixed annual interested and [#permalink]

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New post 12 Jul 2008, 16:01
John opened a new account of fixed annual interested and deposited 20,000 in the account. Interest rate was compounded quarterly. If no transactions were made, how much interest was made at the end of the 1st quarter?
1. The interest earned at the end of the 2nd quarter was 1% more than that at the 2nd quarter.
2. The interest earned at the 2nd quarter was $2 more than at the first quarter.

OA is D

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Manager
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Joined: 15 Dec 2008
Posts: 52
Schools: HBS(08) - Ding. HBS, Stanford, Kellogg, Tuck, Stern, all dings. Yale - Withdrew App. Emory Executive -- Accepted, Matriculated, Withdrewed (yes, I spelled it wrong on purpose). ROSS -- GO BLUE 2011.
Re: interest question [#permalink]

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New post 17 Mar 2009, 08:04
Jamesk486 wrote:
John opened a new account of fixed annual interested and deposited 20,000 in the account. Interest rate was compounded quarterly. If no transactions were made, how much interest was made at the end of the 1st quarter?
1. The interest earned at the end of the 2nd quarter was 1% more than that at the 2nd quarter.
2. The interest earned at the 2nd quarter was $2 more than at the first quarter.

OA is D

1)
1st quarter interest= P(interest rate)
2nd quarter interest= P(1+interest rate)(interest rate)
P=20,000
1 percent more = 1.01

so...

1.01(20000(interest rate)=20000(1+interest rate)(interest rate)

you can solve for interest rate, you can then use this in the 2nd quarter interest formula to solve for interest.

Sufficient


2. same drill except the formula is now

2+(20000(interest rate)=20000(1+interest rate)(interest rate)

you can solve for interest rate, you can then use this in the 2nd quarter interest formula to solve for interest.

Sufficient

D

--== Message from GMAT Club Team ==--

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If you would like to discuss this question please re-post it in the respective forum. Thank you!

To review the GMAT Club's Forums Posting Guidelines, please follow these links: Quantitative | Verbal Please note - we may remove posts that do not follow our posting guidelines. Thank you.
Re: interest question   [#permalink] 17 Mar 2009, 08:04
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John opened a new account of fixed annual interested and

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