Forum Home > GMAT > Quantitative > Problem Solving (PS)
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.
Jul 2710:00 AM PDT
-11:00 AM PDT
Are you struggling with the GMAT verbal section? Do tricky questions and lengthy passages overwhelm you? Don't worry—I've got you covered! In this video, I'll provide a detailed, actionable plan to help you significantly boost your verbal score.
Jul 2508:00 AM EDT
-11:59 PM EDT
More and more TTP students are earning impressive scores on the GMAT. Now is the perfect time to join the many GMAT students who made the switch to TTP and surpassed their wildest expectations on test day.- Jul 28
10:00 AM PDT
-11:00 AM PDT
We will learn how to guess an answer choice better on the GMAT. If you are running out of time and want to guess on a few questions, these effective techniques will help you in making a smart guess. 
Jul 2811:00 AM IST
-01:00 PM IST
Attend this free GMAT Algebra Webinar and learn how to master the most challenging Inequalities and Absolute Value problems with ease.- Jul 31
05:55 AM PDT
-12:30 PM PDT
MBA Application Walkthrough and Essay Review. You will have a chance to hear from experts covering the Top 15 MBA programs, covering details of the application and essays. 
Jul 3110:00 AM EDT
-11:59 PM PDT
Save 20% on Target Test Prep and Score in the 100th Percentile in GMAT Verbal! Our course uses techniques such as topical study and spaced repetition to maximize knowledge retention and make studying simple and fun.
Re: Peter invests $100,000 in an account that pays 12%
[#permalink]
14 Aug 2021, 15:35
14 Aug 2021, 15:35
I would like some assistance with understanding Martha's portion of this problem.
Martha’s interest, 12%/12 = 1% each month:
For the 1st month = $100,000*0.01 = $1,000. Martha has $101,000 at the end of month 1
For the 2nd month = $101,000*1.01 ~ $102,000
For the 3rd month = $102,000*1.01 ~ $102,000+$1,020 ~ $103,000
The top post seems to only be calculating the interest on the interest ($1,000 + 1% of 1,000 = $1,010). In reality, the full amount will compound at the end of each month. I understand that this is an approximation, but only calculating the interest on the interest seems like too much of an approximation. What am I missing here?
Martha’s interest, 12%/12 = 1% each month:
For the 1st month = $100,000*0.01 = $1,000. Martha has $101,000 at the end of month 1
For the 2nd month = $101,000*1.01 ~ $102,000
For the 3rd month = $102,000*1.01 ~ $102,000+$1,020 ~ $103,000
The top post seems to only be calculating the interest on the interest ($1,000 + 1% of 1,000 = $1,010). In reality, the full amount will compound at the end of each month. I understand that this is an approximation, but only calculating the interest on the interest seems like too much of an approximation. What am I missing here?
Re: Peter invests $100,000 in an account that pays 12%
[#permalink]
11 Sep 2021, 20:40
11 Sep 2021, 20:40
1
Kudos
1
Bookmarks
We can use our common sense also compounding every month means annual effective rate would little bit more than 12% and less than 13 % so c would be the answere around 12.6%
we can solve this ques in just 20 seconds...
we can solve this ques in just 20 seconds...
Re: Peter invests $100,000 in an account that pays 12%
[#permalink]
20 Oct 2022, 09:11
20 Oct 2022, 09:11
Given: Peter invests $100,000 in an account that pays 12% annual interest: the interest is paid once, at the end of the year. Martha invests $100,000 in an account that pays 12% annual interest, compounding monthly at the end of each month.
Asked: At the end of one full year, compared to Peter's account, approximately how much more does Martha’s account have?
Peter's interest at the end of the year = $100,000 * 12% = $12000
Matha's interest at the end of the year = $100,000 * {(1+12%/12)^12 - 1} = $100,000 *(1.01^12-1) = $100,000 (.12 + 12C2*.0001 + 12C3*.000001 ) = $12000 + $660 + $22
Difference in interest received by Peter and Martha at the end of the year = $682
IMO C
Asked: At the end of one full year, compared to Peter's account, approximately how much more does Martha’s account have?
Peter's interest at the end of the year = $100,000 * 12% = $12000
Matha's interest at the end of the year = $100,000 * {(1+12%/12)^12 - 1} = $100,000 *(1.01^12-1) = $100,000 (.12 + 12C2*.0001 + 12C3*.000001 ) = $12000 + $660 + $22
Difference in interest received by Peter and Martha at the end of the year = $682
IMO C
