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Jolene entered an 18-month investment contract that

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Re: Jolene entered an 18-month investment contract that  [#permalink]

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New post 15 Dec 2017, 11:53
Chembeti wrote:
Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?

A. $506.00
B. $726.24
C. $900.00
D. $920.24
E. $926.24


After 6 months, Jolene has 10,000 x 1.02 = 10,200 dollars.

After 12 months, Jolene has 10,200 x 1.03 = 10,506 dollars.

After 18 months, Jolene has 10,506 x 1.04 = 10,926.24 dollars.

Thus, the total interest made was 926.24 dollars.

Answer: E
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Re: Jolene entered an 18-month investment contract that  [#permalink]

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New post 03 Feb 2018, 16:50
Hi All,

This question is really just about staying organized and doing the calculations one 'step' at a time.

Given the interest payments at 6 months, 12 months and 18 months, the first bit of interest on the $10,000 would be...

6 months: $10,000 + (.02)(10,000) = $10,200
Interest = $200

At the 12 month mark, the interest would be on $10,200 though...

12 months: $10,200 + (.03)(10,200) = $10,506
Interest = $306

At the 18 month mark, the interest would be on $10,506...

18 months: $10,506 + (.04)(10,506) = about $10,926
Interest = about $420

The question asks for the TOTAL interest earned. We can either add up the 3 interest payments OR since we know the final TOTAL, we can subtract $10,000 to determine the interest.

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Re: Jolene entered an 18-month investment contract that  [#permalink]

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New post 31 Jul 2018, 02:35
I used 1/3 as the year, but evidently, no one included the year in their solving. Why?

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Re: Jolene entered an 18-month investment contract that &nbs [#permalink] 31 Jul 2018, 02:35

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