GRE Prep Club Team Member
Joined: 20 Feb 2017
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Re: Donald plans to invest x dollars in a savings account that pays intere
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12 Mar 2022, 22:04
Answer = D = 2500
For small amount, small duration (in 6 months), with quarterly compounding, there would be hardly major difference between SI & CI.
We can safely use the SI formula after proper adjustments
SI = 100
Principal = p (Required to be calculated)
RoI = 8% PA = 4% for 6 months
\(100 = p * \frac{4}{100}\)
\(p = \frac{100*100}{4} = 2500\)