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

 It is currently 24 Sep 2018, 06:39

### 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

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

# On May 1 of last year, Jasmin invested x dollars in a new

Author Message
TAGS:

### Hide Tags

Director
Status: Finally Done. Admitted in Kellogg for 2015 intake
Joined: 25 Jun 2011
Posts: 505
Location: United Kingdom
GMAT 1: 730 Q49 V45
GPA: 2.9
WE: Information Technology (Consulting)
On May 1 of last year, Jasmin invested x dollars in a new  [#permalink]

### Show Tags

05 Jun 2012, 05:03
15
00:00

Difficulty:

5% (low)

Question Stats:

88% (00:50) correct 12% (01:00) wrong based on 595 sessions

### HideShow timer Statistics

On May 1 of last year, Jasmin invested x dollars in a new account at an interest rate of 6 percent per year, compounded monthly. If no other deposits or withdrawals were made in the account and the interest rate did not change, what is the value of x?

(1) As of June1 of last year, the investment had earned $200 in interest. (2) As of July 1 of last year, the investment had earned$401 in interest.

I got this right but it was the guess work, Can someone please explain the mathematical solution to this?

_________________

Best Regards,
E.

MGMAT 1 --> 530
MGMAT 2--> 640
MGMAT 3 ---> 610
GMAT ==> 730

e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2686
Re: on may 1 of last year, jasmin invested X dollars in a new ac  [#permalink]

### Show Tags

17 Jan 2013, 01:48
5
1
fozzzy wrote:
on may 1 of last year, jasmin invested X dollars in a new account at an interest rate of 6 percent per year, compounded monthly. If no other deposits or withdrawals were made in the account and the interest rate did not change, what is the value of x?

1) as of june 1 of last year, the investment had earned $200 in interest 2) as of july 1 of lasy year, the investment had earned$401 in interest.

I know its a basic question, you don't really need to solve it but I'm interested in the detailed approach in case I see a problem solving question of this type.

Statement 1-

Monthly C.I.(Compd. Int.) = 6/12=0.5% per month;
When there is only one period for calculation, then C.I.= S.I.(simple Int.). In this question May to June is one month only.

We know that SI=P*r*t/100 => 200=P*0.5*1/100 => P can be derived. There is no need to calculate exact value in DS question.Just make sure there is a unique value. Sufficient.

Statement 2-

From May to July there are 2 periods, so this is the case of CI rather SI.

We know that CI=P(1+r/100)^n => n= # of periods = 2 months => 401=P(1+0.5/100)^2 => P can be derived. There is no need to calculate exact value. Sufficient.

-Shalabh Jain
_________________

| '4 out of Top 5' Instructors on gmatclub | 70 point improvement guarantee | www.e-gmat.com

Senior Manager
Affiliations: UWC
Joined: 09 May 2012
Posts: 380
GMAT 1: 620 Q42 V33
GMAT 2: 680 Q44 V38
GPA: 3.43
WE: Engineering (Entertainment and Sports)
Re: On May 1 of last year, Jasmin invested x dollars in a new  [#permalink]

### Show Tags

30 Jun 2012, 23:46
4
2
Principal: $x Rate (per year): 6% compounded monthly Rate (per month): $$\frac{6%(per year)}{12(months)} = 0.5%$$ (1) As of June1 of last year, the investment had earned$200 in interest.

In one months time, the interest earned is $200: $$x * (\frac{0.5}{100}) = 200.$$ From this, we can find out the value of x. Hence, A is sufficient (2) As of July 1 of last year, the investment had earned$401 in interest.

In two months, the interest earned on the new principal is $401: $$x * (1 + \frac{0.5}{100})*(\frac{0.5}{100}) = 401.$$ Above, the expression $$x * (1 + \frac{0.5}{100})$$ represents the principal after the end if the first month i.e the initial principal+one month's worth of interest. This is enough to compute the value of x. B is also sufficient. Thus, the answer is D, both statements alone are sufficient. ##### General Discussion Manager Joined: 19 Mar 2012 Posts: 156 Location: United States Concentration: Finance, General Management GMAT 1: 750 Q50 V42 GPA: 3.69 WE: Analyst (Mutual Funds and Brokerage) Re: On May 1 of last year, Jasmin invested x dollars in a new [#permalink] ### Show Tags 05 Jun 2012, 09:32 1 I think you can just use the formula: Future Value = Present Value x (1 + (interest rate/12))^number of months In both cases, they give you Future Value (Present Value + Interest Earned), they give you the interest rate (6.0% annually), and they give you the number of months to compound over, so you can solve for the Present Value in both cases Senior Manager Joined: 27 Jun 2012 Posts: 387 Concentration: Strategy, Finance Schools: Haas EWMBA '17 Re: on may 1 of last year, jasmin invested X dollars in a new ac [#permalink] ### Show Tags Updated on: 17 Jan 2013, 01:39 3 1 Interest Rate per month: 6%/12 months = 0.5% (monthly) (1) As of June1 of last year, the investment had earned$200 in interest.
SUFFICIENT: interest earned in one month = $200 $$Principal * (0.5/100) = 200$$ Principal amount =$40000. Hence sufficient.

(2) As of July 1 of last year, the investment had earned $401 in interest. SUFFICIENT: interest earned in two months =$401

$$Principal * (1 + 0.5/100)*(0.5/100) = 401$$
We can solve this equation to find out Principal amount. Hence sufficient.

_________________

Thanks,
Prashant Ponde

Tough 700+ Level RCs: Passage1 | Passage2 | Passage3 | Passage4 | Passage5 | Passage6 | Passage7
VOTE GMAT Practice Tests: Vote Here
PowerScore CR Bible - Official Guide 13 Questions Set Mapped: Click here
Finance your Student loan through SoFi and get $100 referral bonus : Click here Originally posted by PrashantPonde on 17 Jan 2013, 01:35. Last edited by PrashantPonde on 17 Jan 2013, 01:39, edited 2 times in total. Manager Joined: 21 Jul 2012 Posts: 65 Re: On May 1 of last year, Jasmin invested x dollars in a new [#permalink] ### Show Tags 25 Mar 2013, 16:04 I thought with monthly compounding interest, your time value must be multiplied by 12? But we are getting 1 as the exponent, is this because you are multiplying 12* 1/12 for the number of periods being just one month? Manager Joined: 21 Jul 2012 Posts: 65 Re: on may 1 of last year, jasmin invested X dollars in a new ac [#permalink] ### Show Tags 25 Mar 2013, 16:10 PraPon wrote: Interest Rate per month: 6%/12 months = 0.5% (monthly) (1) As of June1 of last year, the investment had earned$200 in interest.
SUFFICIENT: interest earned in one month = $200 $$Principal * (0.5/100) = 200$$ Principal amount =$40000. Hence sufficient.

(2) As of July 1 of last year, the investment had earned $401 in interest. SUFFICIENT: interest earned in two months =$401

$$Principal * (1 + 0.5/100)*(0.5/100) = 401$$
We can solve this equation to find out Principal amount. Hence sufficient.

Also can you explain how you are able to get to principal * (0.5/100) = 200? I guess I am trying to go by the formula which is x(1 + (6/100) / 12) ^ n - x but i dont understand how you get to that
Manager
Joined: 12 Jan 2013
Posts: 168
Re: On May 1 of last year, Jasmin invested x dollars in a new  [#permalink]

### Show Tags

12 Jan 2014, 04:14
enigma123 wrote:
On May 1 of last year, Jasmin invested x dollars in a new account at an interest rate of 6 percent per year, compounded monthly. If no other deposits or withdrawals were made in the account and the interest rate did not change, what is the value of x?

(1) As of June1 of last year, the investment had earned $200 in interest. (2) As of July 1 of last year, the investment had earned$401 in interest.

I got this right but it was the guess work, Can someone please explain the mathematical solution to this?

We're given X*0.05 = Interest after 1 month, so we have two unknowns (because even if we have more than 1 period, that's just an exponential relationship, and the exponent is never unknown)..

Isn't it simply easier to solve this like an algebraic translation instead of doing calculations? That way you only need to know what you need, not what the actual results are.

1) Solves for one of our unknowns, so it's clearly sufficient

2) Also solves for the same unknown as 1), but this time with a different exponent, so this is also sufficient.

So, answer is D. We can solve questions like these in 20 seconds with this approach, no calculation involved at all.
Current Student
Joined: 28 Nov 2014
Posts: 877
Concentration: Strategy
Schools: Fisher '19 (M)
GPA: 3.71
On May 1 of last year, Jasmin invested x dollars in a new  [#permalink]

### Show Tags

Updated on: 06 Sep 2016, 05:19

I thought with monthly compounding interest, your time value must be multiplied by 12? But we are getting 1 as the exponent. The formula that I am using is

I = P [(1+R/100)^n - 1]

I am not able to understand as to why n = 1? Is it because n = c*t = 12 *1/12 = 1?

Originally posted by keats on 06 Sep 2016, 04:36.
Last edited by keats on 06 Sep 2016, 05:19, edited 1 time in total.
Intern
Joined: 06 Sep 2016
Posts: 4
Re: On May 1 of last year, Jasmin invested x dollars in a new  [#permalink]

### Show Tags

06 Sep 2016, 04:54
macjas wrote:
Principal: $x Rate (per year): 6% compounded monthly Rate (per month): $$\frac{6%(per year)}{12(months)} = 0.5%$$ That should be the simplest part but why is it 6/12 and not .06/12 Math Expert Joined: 02 Aug 2009 Posts: 6804 Re: On May 1 of last year, Jasmin invested x dollars in a new [#permalink] ### Show Tags 07 Sep 2016, 02:50 Keats wrote: Bunuel chetan2u Can you please help me here I thought with monthly compounding interest, your time value must be multiplied by 12? But we are getting 1 as the exponent. The formula that I am using is I = P [(1+R/100)^n - 1] I am not able to understand as to why n = 1? Is it because n = c*t = 12 *1/12 = 1? Please confirm. Thanks! Hi standard is compounded annually and the formula you have written fits in there... But if a question has compounded some period, look how many period are there and time will get multipled by that period and the rate will get divided by that... If semiannually, two periods of 6 months in a year, one year will make n as 2 and rate as r/2.. Here it is monthly, so 12 periods in a month, so a year will make n as 12 and rate as 6/12.. But we are looking for only ONE month or 1/12 year, so n will be 1/12 * 12= 1.. _________________ 1) Absolute modulus : http://gmatclub.com/forum/absolute-modulus-a-better-understanding-210849.html#p1622372 2)Combination of similar and dissimilar things : http://gmatclub.com/forum/topic215915.html 3) effects of arithmetic operations : https://gmatclub.com/forum/effects-of-arithmetic-operations-on-fractions-269413.html GMAT online Tutor Current Student Joined: 28 Nov 2014 Posts: 877 Concentration: Strategy Schools: Fisher '19 (M) GPA: 3.71 Re: On May 1 of last year, Jasmin invested x dollars in a new [#permalink] ### Show Tags 08 Sep 2016, 00:43 Thanks chetan2u I have understood your point Current Student Joined: 28 Nov 2014 Posts: 877 Concentration: Strategy Schools: Fisher '19 (M) GPA: 3.71 Re: On May 1 of last year, Jasmin invested x dollars in a new [#permalink] ### Show Tags 08 Sep 2016, 00:50 IsabelleTreuille wrote: macjas wrote: Principal:$x
Rate (per year): 6% compounded monthly

Rate (per month): $$\frac{6%(per year)}{12(months)} = 0.5%$$

That should be the simplest part but why is it 6/12 and not .06/12

Intern
Joined: 07 Jul 2015
Posts: 2
Re: On May 1 of last year, Jasmin invested x dollars in a new  [#permalink]

### Show Tags

11 Mar 2017, 01:50
enigma123 wrote:
On May 1 of last year, Jasmin invested x dollars in a new account at an interest rate of 6 percent per year, compounded monthly. If no other deposits or withdrawals were made in the account and the interest rate did not change, what is the value of x?

(1) As of June1 of last year, the investment had earned $200 in interest. (2) As of July 1 of last year, the investment had earned$401 in interest.

I got this right but it was the guess work, Can someone please explain the mathematical solution to this?

Hi Guys,

I have a query. Both statements A and B says that the investment earned 'abc' $'s in ''INTEREST". Does this mean abc = 'Principal amount + Interest' or abc = 'Interest' ? Many thanks for your help. Math Expert Joined: 02 Sep 2009 Posts: 49417 Re: On May 1 of last year, Jasmin invested x dollars in a new [#permalink] ### Show Tags 11 Mar 2017, 04:17 ruhigupta29 wrote: enigma123 wrote: On May 1 of last year, Jasmin invested x dollars in a new account at an interest rate of 6 percent per year, compounded monthly. If no other deposits or withdrawals were made in the account and the interest rate did not change, what is the value of x? (1) As of June1 of last year, the investment had earned$200 in interest.
(2) As of July 1 of last year, the investment had earned $401 in interest. I got this right but it was the guess work, Can someone please explain the mathematical solution to this? Hi Guys, I have a query. Both statements A and B says that the investment earned 'abc'$'s in ''INTEREST". Does this mean abc = 'Principal amount + Interest' or abc = 'Interest' ?

It's only interest, not principal + interest.
_________________
Target Test Prep Representative
Affiliations: Target Test Prep
Joined: 04 Mar 2011
Posts: 2835
Re: On May 1 of last year, Jasmin invested x dollars in a new  [#permalink]

### Show Tags

21 May 2018, 16:51
enigma123 wrote:
On May 1 of last year, Jasmin invested x dollars in a new account at an interest rate of 6 percent per year, compounded monthly. If no other deposits or withdrawals were made in the account and the interest rate did not change, what is the value of x?

(1) As of June1 of last year, the investment had earned $200 in interest. (2) As of July 1 of last year, the investment had earned$401 in interest.

We are given that Jasmin invested x dollars in a new account at an interest rate of 6 percent per year, compounded monthly, on May 1 of last year. In that case, the total amount A (principal plus interest) after m months will be A = x(1 + 0.06/12)^m or A = x(1.005)^m. Since the principal is x, then the total interest earned during the same period is A - x = x(1.005)^m - x = x(1.005^m - 1).

Statement One Alone:

As of June 1 of last year, the investment had earned $200 in interest. We see that m = 1 since only 1 month passed from May 1 to June 1, so we can create the equation x(1.005^1 - 1) = 200. Without actually solving for x, we see that the equation is solvable for x. So statement one is sufficient. Statement Two Alone: As of July 1 of last year, the investment had earned$401 in interest.

We see that m = 2 since 2 months passed from May 1 to July 1, so we can create the equation x(1.005^2 - 1) = 401. Without actually solving for x, we see that the equation is solvable for x. So statement two is also sufficient.

_________________

Jeffery Miller

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

Re: On May 1 of last year, Jasmin invested x dollars in a new &nbs [#permalink] 21 May 2018, 16:51
Display posts from previous: Sort by

# On May 1 of last year, Jasmin invested x dollars in a new

## Events & Promotions

 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®.