GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 19 Aug 2018, 10:57

Close

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

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

On January 1, 1994, Jill invested P dollars in an account that pays in

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

Hide Tags

Senior Manager
Senior Manager
User avatar
G
Joined: 19 Oct 2012
Posts: 338
Location: India
Concentration: General Management, Operations
GMAT 1: 660 Q47 V35
GMAT 2: 710 Q50 V38
GPA: 3.81
WE: Information Technology (Computer Software)
On January 1, 1994, Jill invested P dollars in an account that pays in  [#permalink]

Show Tags

New post 17 Oct 2017, 06:33
00:00
A
B
C
D
E

Difficulty:

  15% (low)

Question Stats:

80% (00:41) correct 20% (00:50) wrong based on 119 sessions

HideShow timer Statistics

On January 1, 1994, Jill invested P dollars in an account that pays interest at a rate of 8 percent per year, compounded annually on December 31. If there were no other deposits or withdrawals in the account, how many dollars were in the account on January 1, 1998, in terms of P?
A) \(0.32P\)
B) \(4.32P\)
C) \((0.08)^4P\)
D) \((1.08)^4P\)
E) \((1.08P)^4\)

_________________

Citius, Altius, Fortius

PS Forum Moderator
avatar
D
Joined: 25 Feb 2013
Posts: 1203
Location: India
GPA: 3.82
GMAT ToolKit User Premium Member Reviews Badge
Re: On January 1, 1994, Jill invested P dollars in an account that pays in  [#permalink]

Show Tags

New post 17 Oct 2017, 11:51
TheMechanic wrote:
On January 1, 1994, Jill invested P dollars in an account that pays interest at a rate of 8 percent per year, compounded annually on December 31. If there were no other deposits or withdrawals in the account, how many dollars were in the account on January 1, 1998, in terms of P?
A) \(0.32P\)
B) \(4.32P\)
C) \((0.08)^4P\)
D) \((1.08)^4P\)
E) \((1.08P)^4\)


Between 1st Jan 1994 & 1st Jan 1998, time elapsed = 4 years

Use the Compound interest formula to calculate the amount

\(A=P(1+\frac{r}{100})^n\) \(=> P(1+\frac{8}{100})^4\)

or \(A=P(1.08)^4\)

Option D
SC Moderator
avatar
V
Joined: 22 May 2016
Posts: 1910
Premium Member CAT Tests
On January 1, 1994, Jill invested P dollars in an account that pays in  [#permalink]

Show Tags

New post 17 Oct 2017, 12:20
TheMechanic wrote:
On January 1, 1994, Jill invested P dollars in an account that pays interest at a rate of 8 percent per year, compounded annually on December 31. If there were no other deposits or withdrawals in the account, how many dollars were in the account on January 1, 1998, in terms of P?
A) \(0.32P\)
B) \(4.32P\)
C) \((0.08)^4P\)
D) \((1.08)^4P\)
E) \((1.08P)^4\)

Knowing the formula for compound interest helps a lot here.

Compound interest is given by

\(A = P(1 +\frac{r}{n})^{nt}\)

A = final amount
P = principal invested
r = interest rate in decimal form
n = number of compounding periods per year
t = time

Here interest compounds annually; it earns "interest on interest," and pays one time per year, on December 31.

So r = .08
Because \(n = 1\), \((\frac{.08}{1}) = .08\)

Then \(1 + .08 = 1.08\)

Time t, = 4 years: she gets paid December 31 of 1994, 1995, 1996, and 1997

Where n = 1 and t = 4, thus: \((1.08)^{1*4} = (1.08)^4\)

Finally, multiply by the principal: \(P(1.08)^4\)

Answer D
_________________

In the depths of winter, I finally learned
that within me there lay an invincible summer.

-- Albert Camus, "Return to Tipasa"

Target Test Prep Representative
User avatar
G
Status: Founder & CEO
Affiliations: Target Test Prep
Joined: 14 Oct 2015
Posts: 3176
Location: United States (CA)
Re: On January 1, 1994, Jill invested P dollars in an account that pays in  [#permalink]

Show Tags

New post 19 Oct 2017, 10:16
TheMechanic wrote:
On January 1, 1994, Jill invested P dollars in an account that pays interest at a rate of 8 percent per year, compounded annually on December 31. If there were no other deposits or withdrawals in the account, how many dollars were in the account on January 1, 1998, in terms of P?
A) \(0.32P\)
B) \(4.32P\)
C) \((0.08)^4P\)
D) \((1.08)^4P\)
E) \((1.08P)^4\)


Since the investment of P dollars was compounded annually for 4 years, the new value of the original investment is P(1.08)^4.

Answer: D
_________________

Scott Woodbury-Stewart
Founder and CEO

GMAT Quant Self-Study Course
500+ lessons 3000+ practice problems 800+ HD solutions

Re: On January 1, 1994, Jill invested P dollars in an account that pays in &nbs [#permalink] 19 Oct 2017, 10:16
Display posts from previous: Sort by

On January 1, 1994, Jill invested P dollars in an account that pays in

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  

Events & Promotions

PREV
NEXT


GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| GMAT Club Rules| Contact| Sitemap

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®.