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

Redeem
TTP OnDemand GMAT Video Course
Featured Course

Target Test Prep GMAT OnDemand

Scott Woodbury-Stewart’s private virtual classroom — 400 hours of master-class video lessons for the GMAT Focus Edition.

  • 715+ score guarantee — highest in the industry (99th percentile)
  • 52 chapters · 1,500+ lessons · 4,000+ practice questions
  • 400 hours of video · 1,500+ instructor-led HD smartboard lessons
  • 300,000+ students accepted to Harvard, Stanford, Wharton, Booth & Sloan & more
  • 24/7 live support + weekly Zoom office hours with GMAT instructors
  • TTP AI Assist — 24/7 AI-powered virtual tutor for instant help
  • 1,200+ flashcards + AI-powered study assistant & daily calendar
  • OnDemand, LiveTeach & GMAT Bootcamp formats available
  • Also: GRE, SAT Math & Executive Assessment courses
  • MBA Admissions Consulting now available
  • 🏆 2025 EdTech Breakthrough Award: Test Prep Solution Provider of the Year
  • 200,000+ students served
  • 5-day free trial — $0 to start, no auto-billing, cancel anytime
★★★★★ 5.0 (559 reviews)
130-pt guarantee
$0 to start then $127/mo
Start Free 5-Day Trial Read 559 Reviews →

SIMPLE AND COMPOUND INTEREST

Expert replies
Post new topic Post Reply
Previous Topic Next Topic
Master | Next Rank: 500 Posts
Posts: 234
Joined: Fri Oct 01, 2010 7:28 pmFollowed by: 4 members
Location: chennai
Thanked: 5 times
by pappueshwar » Fri Feb 17, 2012 8:24 am
pls assist in solving the below

$1200 is invested at a given interest rate for two years. The difference between the simple 2-year non-compounded return at the end of the two years and an annually compounded return is $132. What is the interest rate?

OA : A
answer i got : 13

A.10%
B.11%
C.12%
D. 13%
E.14%
Top
Join the discussion
Log in to postLogin with Googleuse password
QUOTE IN REPLY
Source: — Problem Solving |

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 3835
Joined: Fri Apr 02, 2010 10:00 pmFollowed by: 523 members
Location: Milpitas, CA
Thanked: 1854 times
GMAT Score:770

by Anurag@Gurome » Fri Feb 17, 2012 7:25 pm
pappueshwar wrote:pls assist in solving the below

$1200 is invested at a given interest rate for two years. The difference between the simple 2-year non-compounded return at the end of the two years and an annually compounded return is $132. What is the interest rate?

OA : A
answer i got : 13

A.10%
B.11%
C.12%
D. 13%
E.14%
Principal = $1200
Let the interest rate is R.
Simple 2-year non-compounded return at the end of the two years = 1200 + (1200 * R * 2) = 1200 + 2400R

Compounded rate of interest in 2 years = 1200(1 + R)²

Difference = 1200(1 + R)² - (1200 + 2400R) = 132
1200(R² + 2R + 1) - 1200 - 2400R = 132
1200R² = 132
R² = 132/1200 implies R ≈ 0.33, which implies rate ≈ [spoiler]33%[/spoiler], which is none of the options.
Anurag Mairal, Ph.D., MBA
GMAT Expert, Admissions and Career Guidance
Gurome, Inc.
1-800-566-4043 (USA)

Join Our Facebook Groups
GMAT with Gurome
https://www.facebook.com/groups/272466352793633/
Admissions with Gurome
https://www.facebook.com/groups/461459690536574/
Career Advising with Gurome
https://www.facebook.com/groups/360435787349781/
Top
Join the discussion
Log in to postLogin with Googleuse password
QUOTE IN REPLY
Post new topic Post Reply
• Page 1 of 1