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GRE Prep Club Team Member
Joined: 20 Feb 2017
Posts: 2508
Given Kudos: 1053
GPA: 3.39
Ms. Kessler bought 100 bonds for $91.25 each. At the end of 2 years th
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27 Nov 2021, 04:29
27 Nov 2021, 04:29
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Ms. Kessler bought 100 bonds for $91.25 each. At the end of 2 years the bonds matured and she collected the par value of $100 each. In addition she collected interest for the 2 years at an annual rate of 2.75 percent of par value. What was Ms. Kessler's effective simple annual interest rate of return on her investment, to the nearest tenth of a percent?
A. 4.4%
B. 6.8%
C. 7.8%
D. 12.6%
E. 15.6%
A. 4.4%
B. 6.8%
C. 7.8%
D. 12.6%
E. 15.6%
Re: Ms. Kessler bought 100 bonds for $91.25 each. At the end of 2 years th
[#permalink]
28 Nov 2021, 09:51
28 Nov 2021, 09:51
Expert Reply
Total Money invested = $91.25 * 100 bonds = $9125
Money received after two years = $100 * 100 bonds + 2.75% of 100 for 100 bonds for 2 years = 100 * 100 + (2.75/100) *100 *100*2
= 10000 + 550 = 10550
Total Profit = $10550 - $9125 = $1425
$1425 is effective return on the $9125 investment after two years
or we can say that $1425 is the interest earned when $9125 is invested at r% annually
Using SI= PRT/100
1425 = (9125 * r * 2)/100
r=7.80 or 7.8% (rounded to nearest tenth decimal)
C.
Money received after two years = $100 * 100 bonds + 2.75% of 100 for 100 bonds for 2 years = 100 * 100 + (2.75/100) *100 *100*2
= 10000 + 550 = 10550
Total Profit = $10550 - $9125 = $1425
$1425 is effective return on the $9125 investment after two years
or we can say that $1425 is the interest earned when $9125 is invested at r% annually
Using SI= PRT/100
1425 = (9125 * r * 2)/100
r=7.80 or 7.8% (rounded to nearest tenth decimal)
C.
gmatclubot
Re: Ms. Kessler bought 100 bonds for $91.25 each. At the end of 2 years th [#permalink]
28 Nov 2021, 09:51
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