GRE Prep Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.
Customized
for You
Track
Your Progress
Practice
Pays
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
GRE Prep Club Team Member
Joined: 20 Feb 2017
Posts: 2508
Given Kudos: 1053
GPA: 3.39
Jeramiah invests his savings of $120,000 by dividing it between two in
[#permalink]
02 Apr 2021, 06:30
02 Apr 2021, 06:30
Expert Reply
7
Bookmarks
00:00
Question Stats:
54% (02:17) correct
45% (03:39) wrong based on 11 sessions
Hide Show timer Statistics
Jeramiah invests his savings of $120,000 by dividing it between two interest-earning accounts. He puts 3/4 of his savings in an account that earns lower interest and 1/4 of his savings in an account that earns higher interest. He has no other accounts that earn interest and he makes $3,636 in interest by the end of the year. If one account earns 2 percent annual interest, and both accounts are compounded semiannually, what percent interest does the other account earn?
A. 3
B. 4
C. 5
D. 6
E. 7
A. 3
B. 4
C. 5
D. 6
E. 7
Retired Moderator
Joined: 16 Apr 2020
Status:Founder & Quant Trainer
Affiliations: Prepster Education
Posts: 1546
Given Kudos: 172
Location: India
WE:Education (Education)
Jeramiah invests his savings of $120,000 by dividing it between two in
[#permalink]
02 Apr 2021, 08:24
02 Apr 2021, 08:24
1
1
Bookmarks
GeminiHeat wrote:
Jeramiah invests his savings of $120,000 by dividing it between two interest-earning accounts. He puts 3/4 of his savings in an account that earns lower interest and 1/4 of his savings in an account that earns higher interest. He has no other accounts that earn interest and he makes $3,636 in interest by the end of the year. If one account earns 2 percent annual interest, and both accounts are compounded semiannually, what percent interest does the other account earn?
A. 3
B. 4
C. 5
D. 6
E. 7
A. 3
B. 4
C. 5
D. 6
E. 7
\(C.I = P(1 + \frac{r}{100n})^{nt} - P\)
Don't worry we will not be using this formula!
Let us solve this using S.I
\($120,000\) is divided into two Principals of \($90,000\) (with lower rate of interest) and \($30,000\) (with higher rate of interest)
Notice, the option choices are all greater than \(2\)%
This means, \($90,000\) was invested at an interest rate of \(2\)%
So, S.I \(= \frac{(90,000)(2)(1)}{100} = $1800\)
Now, \($30,000\) must give us a return of \(3636- 1800 = $1826\) at \(r\)% rate of interest in a year
i.e. \(1836 = \frac{(30,000)(r)(1)}{100}\)
\(r = 6.12\)%
Hence, option D
Re: Jeramiah invests his savings of $120,000 by dividing it between two in
[#permalink]
04 Jan 2024, 08:55
04 Jan 2024, 08:55
1
how semi compounding works for yearly , P= 100 and interest rate is 10% then for 6 month 5% will be applied thus interest= 5 so
amount after 6 month is 105 and for next 6 month 5% will applied on 105 thus amount =110.25
Two amount 90000 & 30000
for 90000 , total interest rate 2% thus interest for 6 months is 1% thus interest=900
for next 6 month 1% interest thus 1% of 900 = 9 , thus interest=909
now total interest after year = 900+909=1809
Remaining amount = 3636-1809=1827
for 30000 let say x% interest , now solve like above by taking values from option , lets take 6
for 1st 6 months , interest will be 3% = 3% of 30000= 900
for 2nd 6 months ,interest will be 3% = 3% of 900 = 27 thus interest =927
total = 900+927=1827 it matches thus answer is D
amount after 6 month is 105 and for next 6 month 5% will applied on 105 thus amount =110.25
Two amount 90000 & 30000
for 90000 , total interest rate 2% thus interest for 6 months is 1% thus interest=900
for next 6 month 1% interest thus 1% of 900 = 9 , thus interest=909
now total interest after year = 900+909=1809
Remaining amount = 3636-1809=1827
for 30000 let say x% interest , now solve like above by taking values from option , lets take 6
for 1st 6 months , interest will be 3% = 3% of 30000= 900
for 2nd 6 months ,interest will be 3% = 3% of 900 = 27 thus interest =927
total = 900+927=1827 it matches thus answer is D
