Events & Promotions
|
|
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
Track
Your Progress
Practice
Pays
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Apr 1612:00 PM EDT
-11:59 PM EDT
You’re first to know: Save $200 on GMAT prep starting tomorrow, 4/13. Get 6 official practice tests and study with real questions. Be ready to save!
Apr 2610:00 AM EDT
-11:00 AM EDT
The Target Test Prep course represents a quantum leap forward in GMAT preparation, a radical reinterpretation of the way that students should study. Try before you buy with a 5-day, full-access trial of the course for FREE!
Apr 2711:00 AM EDT
-12:00 PM EDT
Prefer video-based learning? The Target Test Prep OnDemand course is a one-of-a-kind video masterclass featuring 400 hours of lecture-style teaching by Scott Woodbury-Stewart, founder of Target Test Prep and one of the most accomplished GMAT instructors
Apr 2808:00 AM PDT
-11:00 AM PDT
Whether you are just beginning your MBA journey or fine-tuning your path to a 700+ score, GMAT Day is designed to give you a competitive edge.
kiran120680
Moderator - Masters Forum
Joined: 18 Feb 2019
Last visit: 27 Jul 2022
Posts: 706
Given Kudos: 276
Location: India
Schools: AGSM '20 EDHEC Sept 2019 Intake Great Lakes '21 IE
GMAT 1: 460 Q42 V13
GPA: 3.6
25 Mar 2019, 09:38
Kudos
Bookmarks
B
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
(hard)
Question Stats:
25% (00:26) correct
75%
(01:12)
wrong
based on 4
sessions
History
Date
Time
Result
Not Attempted Yet
Martina invested $1000 for a period of 17 years in a bank that paid variable rates of interest. For the first 2 years, the bank paid an annual interest rate of x percent compounded annually and for the next 5 years, the bank paid a simple interest rate of 12 percent per annum on the compounded amount at the end of the second year. If for the remaining years, Martina earned a total simple interest of $1694 on the compounded amount at the end of the second year, at a rate of 14 percent per annum, by approximately what percentage of the invested amount was the total simple interest earned greater than the compound interest earned?
A. 208%
B. 221%
C. 229%
D. 242%
E. Cannot be determined
A. 208%
B. 221%
C. 229%
D. 242%
E. Cannot be determined
Archived Topic
Hi there,
This topic has been closed and archived due to inactivity or violation of community quality standards. No more replies are possible here.
Where to now? Join ongoing discussions on thousands of quality questions in our Problem Solving (PS) Forum
Still interested in this question? Check out the "Best Topics" block below for a better discussion on this exact question, as well as several more related questions.
Thank you for understanding, and happy exploring!
26 Mar 2019, 16:23
Kudos
Bookmarks
I think the best answer to this question is "who cares", because you'll never see anything even vaguely like this on the GMAT. But if we want to solve it:
- simple interest is the same each year; it's just a fixed percentage of the starting capital. So if the person earned $1694 in simple interest over 10 years, she earned $169.4 in interest each year. If that's 14% of the starting capital C, then 0.14C = 169.4, and solving we find C = 1210. That, according to the wording of the question, is the value of the investment after two years.
- since the only compound interest accrues in the first two years, the total amount of compound interest is thus $210
- we also have five years of simple interest on the $1210 amount, at 12% each year. Since it's simple interest, that's the same as earning 60% once, so 0.6*1210 = $726 is the amount of interest earned at 12%.
- adding the simple interest at 12% to the simple interest at 14%, the total simple interest was $1694 + $726 = $2420
So the total simple interest earned was 2420 - 210 = 2210 greater than the compound interest earned. Since we want to express that difference as a percentage of the initial investment, we must divide by 1000, to get 2.21, and multiply by 100%, so the answer is 221%.
- simple interest is the same each year; it's just a fixed percentage of the starting capital. So if the person earned $1694 in simple interest over 10 years, she earned $169.4 in interest each year. If that's 14% of the starting capital C, then 0.14C = 169.4, and solving we find C = 1210. That, according to the wording of the question, is the value of the investment after two years.
- since the only compound interest accrues in the first two years, the total amount of compound interest is thus $210
- we also have five years of simple interest on the $1210 amount, at 12% each year. Since it's simple interest, that's the same as earning 60% once, so 0.6*1210 = $726 is the amount of interest earned at 12%.
- adding the simple interest at 12% to the simple interest at 14%, the total simple interest was $1694 + $726 = $2420
So the total simple interest earned was 2420 - 210 = 2210 greater than the compound interest earned. Since we want to express that difference as a percentage of the initial investment, we must divide by 1000, to get 2.21, and multiply by 100%, so the answer is 221%.
Archived Topic
Hi there,
This topic has been closed and archived due to inactivity or violation of community quality standards. No more replies are possible here.
Where to now? Join ongoing discussions on thousands of quality questions in our Problem Solving (PS) Forum
Still interested in this question? Check out the "Best Topics" block above for a better discussion on this exact question, as well as several more related questions.
Thank you for understanding, and happy exploring!
Moderator:
