At the beginning of January 2003, Elizabeth invested money

[AAPL]

Magoosh

At the beginning of January 2003, Elizabeth invested money in an account that collected interest, compounding more frequently than a year. Assume the annual percentage rate of interest remained constant. What is the total amount she has invested after seven years?

1) her initial investment was $20,000.
2) the account accrued 7% annual interest.

OA E

[Jay@ManhattanReview]

Magoosh

At the beginning of January 2003, Elizabeth invested money in an account that collected interest, compounding more frequently than a year. Assume the annual percentage rate of interest remained constant. What is the total amount she has invested after seven years?

1) her initial investment was $20,000.
2) the account accrued 7% annual interest.

OA E

Say Elizabeth invested $P at r% per annum rate of interest, and the interested in compounded n times in a year.

Thus, the rate of interest per period = (r/n)% and the number of periods = 7n

Thus, the amount (Say A) after 7 years

A = P(1 + (r/n)%)^7n

So, there are three variables: P, r and n.

Even both the statements are insufficient since we still do not know periodicity, i.e., n. Insufficient

The correct answer: E

Hope this helps!

-Jay
_________________
Manhattan Review

Locations: Manhattan Review Kukatpally | GMAT Prep Jayanagar | GRE Prep Tarnaka | Madhapur GRE Coaching | and many more...

Schedule your free consultation with an experienced GMAT Prep Advisor! Click here.