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.
The value of $1,000 after earning simple interest
[#permalink]
19 Dec 2022, 06:15
19 Dec 2022, 06:15
Expert Reply
00:00
Question Stats:
80% (01:33) correct
19% (01:32) wrong based on 26 sessions
Hide Show timer Statistics
Quantity A |
Quantity B |
The value of $1,000 after earning simple interest at 20% for 5 years |
The value of $1,000 after earning compound interest at 2 0 % for 4 years, compounded annually |
A) Quantity A is greater.
B) Quantity B is greater.
C) The two quantities are equal.
D) The relationship cannot be determined from the information given.
Re: The value of $1,000 after earning simple interest
[#permalink]
29 Dec 2022, 10:55
29 Dec 2022, 10:55
1
SIMPLE INTEREST= 20% of 1000=200
200*5(years)=1000
now add 1000+1000=2000
COMPOUNDED= 20% of 1000=200
1000*1.20^4=2073
QB
200*5(years)=1000
now add 1000+1000=2000
COMPOUNDED= 20% of 1000=200
1000*1.20^4=2073
QB
The value of $1,000 after earning simple interest
[#permalink]
09 Jan 2024, 23:05
09 Jan 2024, 23:05
1
\(SI = P \times R \times T =\) \(1000 \times 0.2 \times 5 = 1000\)
\(CI = P[1+\frac{r}{n}]^{nt} = P[1+\frac{0.2}{1}]^{4(1)} = 1000[1.2]^4 = 2073.6\)
where
r = rate expressed in decimals
n = number of times compounded per year
t = number of years
Clearly Quantity B is greater
\(CI = P[1+\frac{r}{n}]^{nt} = P[1+\frac{0.2}{1}]^{4(1)} = 1000[1.2]^4 = 2073.6\)
where
r = rate expressed in decimals
n = number of times compounded per year
t = number of years
Clearly Quantity B is greater
