interest problem

Jinglander wrote:ok for starters what you wrote is not what they said the answer was. Also you have 1+x/100 meaning this answer will have the principle in the total and not just the interest. corect

Everything 4GMAT_Mumbai said above is correct. Notice that in his formula for compound interest, he subtracts away the principal P.

There's a difference between simple interest and compound interest. When interest is *simple* then each year, we add interest only to the amount of the original investment. So if you invest $200 at 10% simple annual interest, you earn $20 every year. When interest is compounded (the far more common situation, both in real life and on the GMAT), then interest is applied not only to the initial investment but also to any interest already earned. So if you invest $200 at 10% interest, compounded annually, then after one year you'd earn $20 (so you'd then have $220), then after the second year you'd earn $22 (so you'd then have $242), after the third year $24.20, and so on.

The formula in your first post, giving the total amount of interest as 10k*n*(x/100), is correct *if* you are asked to find simple interest. It will *not* be correct if you are asked about compound interest; then you could use the formula 4GMAT_Mumbai gives above.