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DS - compound interest question

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DS - compound interest question

by msd_2008 » Sat Dec 06, 2008 1:55 am
Q. $10,000 is deposited in a certain account that pays r percent annual interest compounded annually, the amount D(t), in dollars, that the deposit will grow to in t years in given by D(t)=10,000(1+(r/100))t What amount will the deposit grow to in 3 years?

(1) D(t) = 11,000
(2) r=10

OA is D. But I disagree with it. Statement 1 gives me no info on 't' and 'r'....I only know the amount

Statement 2 gives me 'r'...but without the information on 't' its of no use. Thus statement 1 is also required to find out 't'
Hence I would choose C.
Can someone please explain whats wrong with my logic?

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MSD
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Re: DS - compound interest question

by parallel_chase » Sat Dec 06, 2008 4:36 am
msd_2008 wrote:Q. $10,000 is deposited in a certain account that pays r percent annual interest compounded annually, the amount D(t), in dollars, that the deposit will grow to in t years in given by D(t)=10,000(1+(r/100))t What amount will the deposit grow to in 3 years?

(1) D(t) = 11,000
(2) r=10

OA is D. But I disagree with it. Statement 1 gives me no info on 't' and 'r'....I only know the amount

Statement 2 gives me 'r'...but without the information on 't' its of no use. Thus statement 1 is also required to find out 't'
Hence I would choose C.
Can someone please explain whats wrong with my logic?

Regards
MSD
look closely the question stem gives you the value of t

t = 3

Hence D is correct.

Let me know if you have any doubts
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by msd_2008 » Sat Dec 06, 2008 4:44 am
Dear Friend,

How is t=3 and where is it given in the question?
Can you please help me understand ?

Regards
MSD
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Re: DS - compound interest question

by parallel_chase » Sat Dec 06, 2008 5:00 am
D(t)=10,000(1+(r/100))t

Statement I

D(t) = 11000

d(1) = 11000

11000 = 10000(1+r/100)*1

11000/10000 = 1+r/100

11/10 -1 = r/100

1/10 = r/100

r = 10

D(t)=10,000(1+(r/100))t

substitute the value of r = 10

and calculate the value of t for 3 years

Statement II

You already have r = 10

t = 3

you can easily find the value of D(t)


Hope this helps.
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by cramya » Sat Dec 06, 2008 12:26 pm
Statement I

D(t) = 11000

d(1) = 11000

Parallel Chase,
I am missing something here.

How did u know t=1 for stmt I? Please help me understand.

Like MSD I was drawn to B) also.

Regards,
CR
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by parallel_chase » Sat Dec 06, 2008 11:33 pm
cramya wrote:
Statement I

D(t) = 11000

d(1) = 11000

Parallel Chase,
I am missing something here.

How did u know t=1 for stmt I? Please help me understand.

Like MSD I was drawn to B) also.

Regards,
CR
The thing is if you take t=2, r will be negative, since we cannot have negative rates, only t=1 can be the possible value.

Let me if you have any other question.
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by mental » Wed Dec 10, 2008 3:29 am
The thing is if you take t=2, r will be negative, since we cannot have negative rates, only t=1 can be the possible value.


why?

lets take t=3

11000 = 10000{(1 + r/100)^3}

1.1 = (1 + r/100)^3

cube root of 1.1 is approximately 1.03

1.03 = 1 + r/100

r = 3%

you have already shown with t = 1, r=10%

why t=2 gives a negetive ans?

11000 = 10000{(1 + r/100)^2}
1.1 = (1 + r/100)^2
square root of 1.1 is approximately 1.05
1.05 = 1 + r/100
r = 5%

different values of r
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by Stuart@KaplanGMAT » Wed Dec 10, 2008 10:51 am
I posted my thoughts here:

https://www.beatthegmat.com/compound-int ... 19026.html

Statement (1) is sufficient as written, but makes no sense - it basically says that D(t) has a fixed value regardless of the time period. So, the answer to the question would be "$11000".

It really should read D(1) = 11000.

Has anyone checked for tyops?
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by ronniecoleman » Fri Dec 12, 2008 3:41 am
quality is the key guys/gals!!

please verify the source!
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by revoltangel » Wed Dec 31, 2008 1:05 pm
msd_2008 wrote:Dear Friend,

How is t=3 and where is it given in the question?
Can you please help me understand ?

Regards
MSD

The last sentence asks how much you will get in 3 years. Therefore, t=3. :D
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by sellaia » Fri Dec 16, 2011 8:15 pm
Stuart Kovinsky wrote:I posted my thoughts here:

https://www.beatthegmat.com/compound-int ... 19026.html

Statement (1) is sufficient as written, but makes no sense - it basically says that D(t) has a fixed value regardless of the time period. So, the answer to the question would be "$11000".

It really should read D(1) = 11000.

Has anyone checked for tyops?
Thanks that's really what confused me. Also, I didn't understand how the t in D(t) translated into a one within the equality D(t) =11,000 = 10,000(1+r/100)^1


Also, can I ask you where are those questions from ?
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