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.
Account A pays 4.04% simple interest
[#permalink]
19 Dec 2021, 12:16
19 Dec 2021, 12:16
15
Bookmarks
00:00
Question Stats:
64% (02:40) correct
35% (02:18) wrong based on 37 sessions
Hide Show timer Statistics
Account A pays 4.04% simple interest and Account B pays x% interest compounded semiannually. The interest earned from a principal of $10000 from both accounts at the end of the first year is equal.
I solve it as follows :
since 10K in both is P I cancel It.
I am left with
\((4.04/100)=(x/4)^2\)
X=40%
May someone clarifies what is the mistake in my solution ?
Quantity A |
Quantity B |
x |
3.8 |
I solve it as follows :
since 10K in both is P I cancel It.
I am left with
\((4.04/100)=(x/4)^2\)
X=40%
May someone clarifies what is the mistake in my solution ?
Re: Account A pays 4.04% simple interest
[#permalink]
19 Dec 2021, 13:23
19 Dec 2021, 13:23
Don't approach it from the perspective of trying to solve the problem. Look at it from the perspective of if interest earned on the account w/ 3.8% interest will be greater than, less than, or equal to the interest earned in account A. So..
Account A: 10000*1.0404=10,404.
Total interest earned= 10404-10000=404
Account B (compounded semi annually): 3.8/2=1.9
10000*1.019=10190....10190*1.019=10383.61
Total interest earned=10383.61-10000-383.61
So, if the interest earned from both accounts were to be equal (must be equal to 404) the interest rate on account B must be greater than 3.8%. So answer A should be correct.
Account A: 10000*1.0404=10,404.
Total interest earned= 10404-10000=404
Account B (compounded semi annually): 3.8/2=1.9
10000*1.019=10190....10190*1.019=10383.61
Total interest earned=10383.61-10000-383.61
So, if the interest earned from both accounts were to be equal (must be equal to 404) the interest rate on account B must be greater than 3.8%. So answer A should be correct.
Re: Account A pays 4.04% simple interest
[#permalink]
20 Dec 2021, 02:37
20 Dec 2021, 02:37
zperk525 wrote:
Don't approach it from the perspective of trying to solve the problem. Look at it from the perspective of if interest earned on the account w/ 3.8% interest will be greater than, less than, or equal to the interest earned in account A. So..
Account A: 10000*1.0404=10,404.
Total interest earned= 10404-10000=404
Account B (compounded semi annually): 3.8/2=1.9
10000*1.019=10190....10190*1.019=10383.61
Total interest earned=10383.61-10000-383.61
So, if the interest earned from both accounts were to be equal (must be equal to 404) the interest rate on account B must be greater than 3.8%. So answer A should be correct.
Account A: 10000*1.0404=10,404.
Total interest earned= 10404-10000=404
Account B (compounded semi annually): 3.8/2=1.9
10000*1.019=10190....10190*1.019=10383.61
Total interest earned=10383.61-10000-383.61
So, if the interest earned from both accounts were to be equal (must be equal to 404) the interest rate on account B must be greater than 3.8%. So answer A should be correct.
Thank u, but I want to understand why my answer is wrong
