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.
Apr 2301:30 AM EDT
-02:30 AM EDT
Struggling with GMAT Verbal as a non-native speaker? Harsh improved his score from 595 to 695 in just 45 days—and scored a 99 %ile in Verbal (V88)! Learn how smart strategy, clarity, and guided prep helped him gain 100 points.
Apr 2308:00 PM PDT
-09:00 PM PDT
Video explanations + diagnosis of 10 weakest areas + 150+ short videos + study plan!
Apr 2512:30 AM EDT
-01:30 AM EDT
At one point, she believed GMAT wasn’t for her. After scoring 595, self-doubt crept in and she questioned her potential. But instead of quitting, she made the right strategic changes. The result? A remarkable comeback to 695. Check out how Saakshi did it.
Apr 2610:00 AM EDT
-11:00 AM EDT
The Target Test Prep course represents a quantum leap forward in GMAT preparation, a radical reinterpretation of the way that students should study. Try before you buy with a 5-day, full-access trial of the course for FREE!
Apr 2711:00 AM EDT
-12:00 PM EDT
Prefer video-based learning? The Target Test Prep OnDemand course is a one-of-a-kind video masterclass featuring 400 hours of lecture-style teaching by Scott Woodbury-Stewart, founder of Target Test Prep and one of the most accomplished GMAT instructors
Apr 2808:00 AM PDT
-11:00 AM PDT
Whether you are just beginning your MBA journey or fine-tuning your path to a 700+ score, GMAT Day is designed to give you a competitive edge.
21 Oct 2015, 21:37
Kudos
Bookmarks
D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
5%
(low)
Question Stats:
87% (01:12) correct
13%
(01:24)
wrong
based on 3260
sessions
History
Date
Time
Result
Not Attempted Yet
A certain investment earned a fixed rate of 4 percent interest per year, compounded annually, for five years. The interest earned for the third year of the investment was how many dollars greater than that for the first year?
(1) The amount of the investment at the beginning of the second year was $4,160.00.
(2) The amount of the investment at the beginning of the third year was $4,326.40.
(1) The amount of the investment at the beginning of the second year was $4,160.00.
(2) The amount of the investment at the beginning of the third year was $4,326.40.
If this question felt shaky,
try an adaptive mini quiz of similar problems in
GMAT Club Forum Quiz →. Free plan gives 5 questions per day.
15 Dec 2017, 18:34
Kudos
Bookmarks
Hi All,
This is a great 'concept' question - meaning that if you recognize the concept(s) involved, you don't have to do much (if any) math to get to the correct answer.
In this prompt, we're told that an investment earns a fixed 4% interest, compounded annually for 5 years. We're asked for the difference, in interest earnings, between the 3rd year and the 1st year.
To start, we don't know the initial investment. However, since we're compounding the interest each year, then we know that the interest will be 4% of whatever total amount is already there. Thus, we have a constant 'multiplier' (1.04) that we'll just keep multiplying year-after-year. This means that if we know ANY dollar figure at any point in the 5 year history, then we can figure out ALL of the other values (using either division - to move backwards, or multiplication - to move forwards).
1) The amount of the investment at the beginning of the second year was $4,160.00
With this Fact, we can move 'backwards' and 'forwards' as described above and get the necessary information to answer the question.
Fact 1 is SUFFICIENT.
2) The amount of the investment at the beginning of the third year was $4,326.40
Just as in Fact 1 (above), we can move 'backwards' and 'forwards' as described and get the necessary information to answer the question.
Fact 2 is SUFFICIENT.
Final Answer:
GMAT assassins aren't born, they're made,
Rich
This is a great 'concept' question - meaning that if you recognize the concept(s) involved, you don't have to do much (if any) math to get to the correct answer.
In this prompt, we're told that an investment earns a fixed 4% interest, compounded annually for 5 years. We're asked for the difference, in interest earnings, between the 3rd year and the 1st year.
To start, we don't know the initial investment. However, since we're compounding the interest each year, then we know that the interest will be 4% of whatever total amount is already there. Thus, we have a constant 'multiplier' (1.04) that we'll just keep multiplying year-after-year. This means that if we know ANY dollar figure at any point in the 5 year history, then we can figure out ALL of the other values (using either division - to move backwards, or multiplication - to move forwards).
1) The amount of the investment at the beginning of the second year was $4,160.00
With this Fact, we can move 'backwards' and 'forwards' as described above and get the necessary information to answer the question.
Fact 1 is SUFFICIENT.
2) The amount of the investment at the beginning of the third year was $4,326.40
Just as in Fact 1 (above), we can move 'backwards' and 'forwards' as described and get the necessary information to answer the question.
Fact 2 is SUFFICIENT.
Final Answer:
GMAT assassins aren't born, they're made,
Rich
22 Jun 2016, 09:39
Kudos
Bookmarks
Hope this helps someone:
Using the formula for compound interest:
\(FV=PV (1+r)^n\)
FV: future Value
PV: present Value
r: annual interest rate
n: number of periods
(1)
Amount of the investment at the beggining of the second year (or initial investment + interest accumulated at the end of the first year) is 4160, which can be represented as:
\(4160=PV (1+0.04\))\(^1\)
\(4000=PV\)
PV is the same as the initial investment, therefore the interest earned after the first year is 160.
once PV is obtained, the difference between the interest earned after the third year and after the first year is:
\([4000(1.04)^3-4000(1.04)^2]\)\(-160\)
further calculation isn´t needed since we are able to respond the question.
(1) Sufficient
(2)
We are able to get PV by using the same formula, only FV and n values are changed:
\(4326.40=PV (1+0.04)^2\)
\(4000=PV\)
once PV is obtained, the difference between the interest earned after the third year and after the first year is:
\([4000(1.04)^3-4000(1.04)^2]\)\(-[4000(1.04)^1-4000]\)
further calculation isn´t needed since we are able to respond the question.
(2) Sufficient
Answer is D
Using the formula for compound interest:
\(FV=PV (1+r)^n\)
FV: future Value
PV: present Value
r: annual interest rate
n: number of periods
(1)
Amount of the investment at the beggining of the second year (or initial investment + interest accumulated at the end of the first year) is 4160, which can be represented as:
\(4160=PV (1+0.04\))\(^1\)
\(4000=PV\)
PV is the same as the initial investment, therefore the interest earned after the first year is 160.
once PV is obtained, the difference between the interest earned after the third year and after the first year is:
\([4000(1.04)^3-4000(1.04)^2]\)\(-160\)
further calculation isn´t needed since we are able to respond the question.
(1) Sufficient
(2)
We are able to get PV by using the same formula, only FV and n values are changed:
\(4326.40=PV (1+0.04)^2\)
\(4000=PV\)
once PV is obtained, the difference between the interest earned after the third year and after the first year is:
\([4000(1.04)^3-4000(1.04)^2]\)\(-[4000(1.04)^1-4000]\)
further calculation isn´t needed since we are able to respond the question.
(2) Sufficient
Answer is D
