Johnny borrows $30,000 from Tony at 2% daily interest compounded daily. How much does Johnny owe Tony after 8 weeks?
a) 30000*0.02^56
b) 30000*1.12
c) 30000*2.12
d) 30000*1.02^56
e) (30000*1.02)^56
Please assist with above problem.
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Jonny borrows $30,000 from Tony at 2% daily interest compoun
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alanforde800Maximus
- Master | Next Rank: 500 Posts
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Think of it as the interest formula. Total = P(1+i)^n
N = # of times compounded
I = interest
Change interest to decimal form 2% - 0.02
8 weeks X 7 days in each week = 56 days
Then just plug in the eq!
P(1+i)^n
Becomes
30000(1.02)^56
N = # of times compounded
I = interest
Change interest to decimal form 2% - 0.02
8 weeks X 7 days in each week = 56 days
Then just plug in the eq!
P(1+i)^n
Becomes
30000(1.02)^56
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GMATGuruNY
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To increase x by 2% is to multiply x by a factor of 1.02:alanforde800Maximus wrote:Johnny borrows $30,000 from Tony at 2% daily interest compounded daily. How much does Johnny owe Tony after 8 weeks?
a) 30000*0.02^56
b) 30000*1.12
c) 30000*2.12
d) 30000*1.02^56
e) (30000*1.02)^56
1.02x.
Here, the borrowed amount increases by 2% every day for 8 weeks, for a total of 56 days.
Thus, the borrowed amount -- $30,000 -- will be multiplied by a factor of 1.02 56 times:
(30,000)(1.02)��.
The correct answer is D.
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Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.
As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.
For more information, please email me (Mitch Hunt) at [email protected].
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