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.

It appears that you are browsing the GMAT Club forum unregistered!

Signing up is free, quick, and confidential.
Join other 500,000 members and get the full benefits of GMAT Club

Registration gives you:

Tests

Take 11 tests and quizzes from GMAT Club and leading GMAT prep companies such as Manhattan GMAT,
Knewton, and others. All are free for GMAT Club members.

Applicant Stats

View detailed applicant stats such as GPA, GMAT score, work experience, location, application
status, and more

Books/Downloads

Download thousands of study notes,
question collections, GMAT Club’s
Grammar and Math books.
All are free!

Thank you for using the timer!
We noticed you are actually not timing your practice. Click the START button first next time you use the timer.
There are many benefits to timing your practice, including:

Peter invests $100,000 in an account that pays 12% [#permalink]

Show Tags

21 Feb 2014, 07:11

19

This post was BOOKMARKED

00:00

A

B

C

D

E

Difficulty:

95% (hard)

Question Stats:

50% (01:41) correct
50% (01:58) wrong based on 440 sessions

HideShow timer Statistics

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. At the end of one full year, compared to Peter's account, approximately how much more does Martha’s account have?

A. Zero B. $68.25 C. $682.50 D. $6825.00 E. $68250.00

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. At the end of one full year, compared to Peter's account, approximately how much more does Martha’s account have?

A. Zero B. $68.25 C. $682.50 D. $6825.00 E. $68250.00

Peters interest = $100,000*0.12 = $12,000 or $1,000 each month.

Martha’s interest, 12%/12 = 1% each month: For the 1st month = $100,000*0.01 = $1,000; For the 2nd month = $1,000 + 1% of 1,000 = $1,010, so we would have interest earned on interest (very small amount); For the 3rd month = $1,010 + 1% of 1,010 = ~$1,020; For the 4th month = $1,020 + 1% of 1,020 = ~$1,030; ... For the 12th month = $1,100 + 1% of 1,100 = ~$1,110.

The difference between Peters interest and Martha’s interest = ~(10 + 20 + ... + 110) = $660.

Thanks Bunuel. I just wanted to tell Manofsteel that in as much as its a correct formula, that approach will waste a lot of time. Thanks for alternative, fast approach Bunuel.

Thanks Bunuel. I just wanted to tell Manofsteel that in as much as its a correct formula, that approach will waste a lot of time. Thanks for alternative, fast approach Bunuel.

To practice similar questions please follow the links in my post above.
_________________

Re: Peter invests $100,000 in an account that pays 12% [#permalink]

Show Tags

13 Jan 2015, 15:31

1

This post was BOOKMARKED

Bunuel wrote:

guerrero25 wrote:

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. At the end of one full year, compared to Peter's account, approximately how much more does Martha’s account have?

A. Zero B. $68.25 C. $682.50 D. $6825.00 E. $68250.00

Peters interest = $100,000*0.12 = $12,000 or $1,000 each month.

Martha’s interest, 12%/12 = 1% each month: For the 1st month = $100,000*0.01 = $1,000; For the 2nd month = $1,000 + 1% of 1,000 = $1,010, so we would have interest earned on interest (very small amount); For the 3rd month = $1,010 + 1% of 1,010 = ~$1,020; For the 4th month = $1,020 + 1% of 1,020 = ~$1,030; ... For the 12th month = $1,100 + 1% of 1,100 = ~$1,110.

The difference between Peters interest and Martha’s interest = ~(10 + 20 + ... + 110) = $660.

Dear Bunuel, In the second month of Martha why didn't you pick the primary amount which is 100,000 . I mean at first month her interest is on 100,000 and second month it should be on 101,000 ? But you wrote on 1000. I am not clear actually. Can you please give a brief?

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. At the end of one full year, compared to Peter's account, approximately how much more does Martha’s account have?

A. Zero B. $68.25 C. $682.50 D. $6825.00 E. $68250.00

Peters interest = $100,000*0.12 = $12,000 or $1,000 each month.

Martha’s interest, 12%/12 = 1% each month: For the 1st month = $100,000*0.01 = $1,000; For the 2nd month = $1,000 + 1% of 1,000 = $1,010, so we would have interest earned on interest (very small amount); For the 3rd month = $1,010 + 1% of 1,010 = ~$1,020; For the 4th month = $1,020 + 1% of 1,020 = ~$1,030; ... For the 12th month = $1,100 + 1% of 1,100 = ~$1,110.

The difference between Peters interest and Martha’s interest = ~(10 + 20 + ... + 110) = $660.

Dear Bunuel, In the second month of Martha why didn't you pick the primary amount which is 100,000 . I mean at first month her interest is on 100,000 and second month it should be on 101,000 ? But you wrote on 1000. I am not clear actually. Can you please give a brief?

Your way: 0.01*$101,000 = $1,010. My way: $1,000 + 1% of 1,000 = $1,010.
_________________