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21 Jul 2019, 10:06
Kudos
Bookmarks
C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
49% (03:04) correct
51%
(02:54)
wrong
based on 265
sessions
History
Date
Time
Result
Not Attempted Yet
Novak invested $5000 in scheme A for 4 years, which gave a fixed rate of return each year. From the second year of this investment, the interest earned on scheme A in the previous year was reinvested annually in scheme B, whose annual rate of interest, compounded annually, varied with the performance of scheme B in that particular year. If the total interest earned from both the schemes in the first 3 years was $500, $550 and $710 respectively and scheme B offered an interest rate of 5 percent per annum in the fourth year, what was the total interest in dollars that was earned in the fourth year from both the schemes?
A.415
B.563
C.588
D.628
E.735
A.415
B.563
C.588
D.628
E.735
23 Jul 2019, 04:57
Kudos
Bookmarks
mangamma
Given: Novak invested $5000 in scheme A for 4 years, which gave a fixed rate of return each year. From the second year of this investment, the interest earned on scheme A in the previous year was reinvested annually in scheme B, whose annual rate of interest, compounded annually, varied with the performance of scheme B in that particular year. If the total interest earned from both the schemes in the first 3 years was $500, $550 and $710 respectively
Asked: Scheme B offered an interest rate of 5 percent per annum in the fourth year, what was the total interest in dollars that was earned in the fourth year from both the schemes?
$5000 is invested in scheme A @10% per annum giving fixed interest of $500
Total interest accrued in 3 years = 500 + 550 + 710 = $1760
Interest earned is reinvested in Scheme B @ 5% in 4th year => Interest earned in scheme B = 1760 *5% = 88
Total interest earned in scheme A & scheme B in 4th Year = 500 + 88 = $588
IMO C
General Discussion
25 Aug 2021, 07:29
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mangamma
After the first year, we only have the interest from scheme A. Therefore, the fixed interest we receive each year from A is $500.
Scheme B has a principal of 500 + 550 + 710 = 1760.
The interest from B is 1760*5% = 88.
The interest from A is still 500. Then the total interest is 588.
Ans: C
