Following is a DS question. Please help me to explain the concept behind it. In my openion the answer should be 1 using the usual formula of compound interest but the book says it is 3 means statements 1 and 2 taken together are sufficient. Please try and explain which option is right?
Q: Mr. Daniels deposits $10,000 in a savings certificate, he earns p percent annual interest compounded quaterly. What is the value of p?
(1) During the term of the certificate , he earns $ 18 more than he would if the interest were not compounded.
(2) He withdraws all the money six months after depositing it.
What would be the answer choise
1,2,3,4,5?
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Compound interest DS Q from Kaplan math WB 324 Q 22
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chetanojha
- Master | Next Rank: 500 Posts
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To find the value of P i.e. interest rate. You need the following information:
1. Total interest earned.
2. Period for which interest is earned i.e. 6 months, 1 years etc.
Now
Answer Choice 1: Only gives you total interest earned but not period. So NOT SUFFICIENT.
Answer Choice 2: Only gives you period for which interest is earned but not the amount. Hence NOT SUFFICIENT.
Taken Together you have all pre-requisite. Hence C.
1. Total interest earned.
2. Period for which interest is earned i.e. 6 months, 1 years etc.
Now
Answer Choice 1: Only gives you total interest earned but not period. So NOT SUFFICIENT.
Answer Choice 2: Only gives you period for which interest is earned but not the amount. Hence NOT SUFFICIENT.
Taken Together you have all pre-requisite. Hence C.
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chetanojha
- Master | Next Rank: 500 Posts
- Posts: 125
- Joined: Sun Sep 16, 2007 1:38 pm
- Thanked: 6 times
To find the value of P i.e. interest rate. You need the following information:
1. Total interest earned.
2. Period for which interest is earned i.e. 6 months, 1 years etc.
Now
Answer Choice 1: Only gives you total interest earned but not period. So NOT SUFFICIENT.
Answer Choice 2: Only gives you period for which interest is earned but not the amount. Hence NOT SUFFICIENT.
Taken Together you have all pre-requisite. Hence C.
1. Total interest earned.
2. Period for which interest is earned i.e. 6 months, 1 years etc.
Now
Answer Choice 1: Only gives you total interest earned but not period. So NOT SUFFICIENT.
Answer Choice 2: Only gives you period for which interest is earned but not the amount. Hence NOT SUFFICIENT.
Taken Together you have all pre-requisite. Hence C.
-
chetanojha
- Master | Next Rank: 500 Posts
- Posts: 125
- Joined: Sun Sep 16, 2007 1:38 pm
- Thanked: 6 times
To find the value of P i.e. interest rate. You need the following information:
1. Total interest earned.
2. Period for which interest is earned i.e. 6 months, 1 years etc.
Now
Answer Choice 1: Only gives you total interest earned but not period. So NOT SUFFICIENT.
Answer Choice 2: Only gives you period for which interest is earned but not the amount. Hence NOT SUFFICIENT.
Taken Together you have all pre-requisite. Hence C.
1. Total interest earned.
2. Period for which interest is earned i.e. 6 months, 1 years etc.
Now
Answer Choice 1: Only gives you total interest earned but not period. So NOT SUFFICIENT.
Answer Choice 2: Only gives you period for which interest is earned but not the amount. Hence NOT SUFFICIENT.
Taken Together you have all pre-requisite. Hence C.
1. During the term of the certificate , he earns $ 18 more than he would if the interest were not compounded.
now by looking at option 1 , what I get is that , if the interest were not compounded then the interest would have been SIMPLE INTEREST =principle*rate*time/100
so compound interest-simple interest= 18
Now I am not sure that should I bring in the simple interest concept here or not but there are 2 types of interests only, so if it is not compound, it has to be simple.
mmmmmmmmmmmmmmm what do you think?
now by looking at option 1 , what I get is that , if the interest were not compounded then the interest would have been SIMPLE INTEREST =principle*rate*time/100
so compound interest-simple interest= 18
Now I am not sure that should I bring in the simple interest concept here or not but there are 2 types of interests only, so if it is not compound, it has to be simple.
mmmmmmmmmmmmmmm what do you think?
