BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem

Compound Interest

This topic has expert replies
Post new topic Post Reply
Previous Topic Next Topic
Senior | Next Rank: 100 Posts
Posts: 73
Joined: Fri Jul 23, 2010 1:30 pm

Compound Interest

by PGMAT » Thu Aug 30, 2012 5:36 pm
Michelle deposited a certain sum of money in a savings account on July 1st, 2007. She earns an 8% interest compounded semiannually. The sum of money in the account on December 31st, 2009 is approximately what percent of the initial deposit?

117%
120%
121%
135%
140%

Can some one show an easy way to solve this? Thanks.
[spoiler]OA:C[/spoiler]
Top
Source: — Problem Solving |
User avatar
MBA Admissions Consultant
Posts: 2279
Joined: Fri Nov 11, 2011 7:51 am
Location: New York
Thanked: 660 times
Followed by:266 members
GMAT Score:770

by Jim@StratusPrep » Thu Aug 30, 2012 5:59 pm
Simple interest over 5 periods would be 20% (4 x 5). You know you are going to be more than this because of compounding but not almost double or double as is in D and E.
GMAT Answers provides a world class adaptive learning platform.
-- Push button course navigation to simplify planning
-- Daily assignments to fit your exam timeline
-- Organized review that is tailored based on your abiility
-- 1,000s of unique GMAT questions
-- 100s of handwritten 'digital flip books' for OG questions
-- 100% Free Trial and less than $20 per month after.
-- Free GMAT Quantitative Review

Image
Top
User avatar
Master | Next Rank: 500 Posts
Posts: 167
Joined: Fri Mar 09, 2012 8:35 pm
Thanked: 39 times
Followed by:3 members

by adthedaddy » Thu Aug 30, 2012 8:13 pm
Ans: 121%
Detailing the steps below -
Assuming Principal amount=100 , over 5 terms we get a sum = 121 which is 121%
Attachments
Compound Int_BTG.png
"Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary" - Steve Jobs
Top
Senior | Next Rank: 100 Posts
Posts: 82
Joined: Wed Feb 08, 2012 8:33 pm
Location: india

by mohan514 » Fri Aug 31, 2012 10:22 am
adthedaddy wrote:Ans: 121%
Detailing the steps below -
Assuming Principal amount=100 , over 5 terms we get a sum = 121 which is 121%
can we take 8% annually as 4% semi annually when compounding it
please elaborate your explanation..
thanks
Top
Post new topic Post Reply
• Page 1 of 1