A certain money market account that had a balance of $48,000

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BTGmoderatorDC: Moderator; Posts: 7187; Joined: Thu Sep 07, 2017 4:43 pm; Followed by:23 members

A certain money market account that had a balance of $48,000

by BTGmoderatorDC » Wed Apr 17, 2019 4:42 pm

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A certain money market account that had a balance of $48,000 during all of last month earned $360 in interest for the month. At what simple annual interest rate did the account earn interest last month?

A. 7%
B. 7.50%
C. 8%
D. 8.50%
E. 9%

OA E

Source: Magoosh

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Source: Beat The GMAT — Problem Solving | Wed Apr 17, 2019 4:42 pm

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by Ian Stewart » Thu Apr 18, 2019 5:42 pm

If it earns $360 in a month, it earns $360 *12 in a year, if there's no compounding. Dividing by the amount invested, we'll get the interest rate for the year:

(12)(360)/48000 = 1*360/4000 = 36/400 = 9/100 = 9%

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deloitte247: Legendary Member; Posts: 2214; Joined: Fri Mar 02, 2018 2:22 pm; Followed by:5 members

by deloitte247 » Sun Apr 21, 2019 3:54 am

$$S.I=\frac{\left(\Pr incipal\cdot Rate\cdot Time\right)}{100}$$
S.I = 350 dollars
Principal = 48,000 dollars
Time = 1 month = 1/12 = 0.083 years
$$360=\frac{\left(48,000\cdot Rate\cdot0.083\right)}{100}$$
$$360=Rate\cdot\left(480\cdot0.083\right)$$
$$\frac{360}{39.84}=Rate\cdot\frac{\left(480\cdot0.083\right)}{39.84}$$
$$Rate=9.036\%$$
$$Rate\approx9\%$$
$$Answer\ is\ OPTION\ C$$

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Scott@TargetTestPrep: GMAT Instructor; Posts: 8085; Joined: Sat Apr 25, 2015 10:56 am; Location: Los Angeles, CA; Thanked: 43 times; Followed by:29 members

by Scott@TargetTestPrep » Tue Apr 23, 2019 6:26 pm

BTGmoderatorDC wrote:A certain money market account that had a balance of $48,000 during all of last month earned $360 in interest for the month. At what simple annual interest rate did the account earn interest last month?

A. 7%
B. 7.50%
C. 8%
D. 8.50%
E. 9%

OA E

Source: Magoosh

Since 1 month is 1/12 of a year, we can create the equation:

48,000 x r/100 x 1/12 = 360

48,000r/1200 = 360

40r = 360

r = 9

Alternate Solution:

If the investment earns $360 simple interest in one month, then in one year, it will earn 360 x 12 = $4,320 in interest.

Expressed as a percentage, the annual interest rate is 4,320/48,000 = 0.09, or 9%

Answer: E

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