Bob invested $2000 in fund A and $1000 in fund B. Over the

[AAPL]

GMAT Prep

Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after Bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

A. $500
B. $550
C. $600
D. $650
E. $700

OA B.

[vaibhav101]

amount earned on investment A = 2000+12% of 2000=2240
amount earned on investment B =1000*1.3*1.3=1690
now, 2240-1690=550
OA B

[Jay@ManhattanReview]

GMAT Prep

Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after Bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

A. $500
B. $550
C. $600
D. $650
E. $700

OA B.

Note that Fund A earned a total interest of 12 percent for the two years combined; it means that the total interest for two years = 2000*12% = $240. You need not take the number of years (2 years) into consideration!

Amount received for fund B after 2 years = 1000*(1 + 30%)^2 = 1000*(1.30^ = 1000*1.68 = $1690.

Amount receive from fund A is greater than from fund B is more by 2000 - 1690 = $550.

The correct answer: B

Hope this helps!

-Jay
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[Scott@TargetTestPrep]

GMAT Prep

Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after Bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

A. $500
B. $550
C. $600
D. $650
E. $700

The interest earned in fund A was 2,000 x 0.12= 240 dollars, bringing his total investment in fund A to 2,240 dollars.

Using the formula for compound interest, the final value of investment B after 2 years was:

Final value = 1,000(1 + 0.3)^2

Final value = 1,000(1.3)^2

Final Value = 1,000(1.69) = 1,690

Thus, fund A was worth 2,240 - 1,690 = 550 dollars more than fund B.

Answer: B

[GMATGuruNY]

GMAT Prep

Bob invested $2000 in fund A and $1000 in fund B. Over the next two years, the money in Fund A earned a total interest of 12 percent for the two years combined and the money in fund B earned 30 percent annual interest compounded annually. Two years after Bob made these investments. Bob's investment in fund A was worth how much more than his investment in fund B?

A. $500
B. $550
C. $600
D. $650
E. $700.

Fund A after 2 years:
2000 + (10% of 2000) + (2)(1% of 2000) = 2000 + 200 + 2(20) = 2240.

Fund B after 1 year:
1000 + (30% of 1000) = 1000 + 300 = 1300.
Fund B after 2 years:
1300 + (30% of 1300) = 1300 + 390 = 1690.

Difference after two years:
2240 - 1690 = 550.

The correct answer is B.