It is currently 16 Dec 2018, 22:07
My Tests

Close

GMAT 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

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Amy deposited $1,000 into an account that earns 8% annual in

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
GMAT Club Legend
GMAT Club Legend
User avatar
Joined: 07 Jun 2014
Posts: 4750
GRE 1: Q167 V156
WE: Business Development (Energy and Utilities)
Followers: 93

Kudos [?]: 1664 [0], given: 396

CAT Tests
Amy deposited $1,000 into an account that earns 8% annual in [#permalink] New post 27 Jul 2018, 07:04
Expert's post
00:00

Question Stats:

62% (01:06) correct 37% (04:28) wrong based on 8 sessions
Amy deposited $1,000 into an account that earns 8% annual interest compounded every 6 months.
Bob deposited $1,000 into an account that earns 8% annual interest compounded quarterly. If neither Amy nor Bob makes any additional deposits or withdrawals, in 6 months how much more money will Bob have in his account than will Amy have in hers?

(A) $40
(B) $8
(C) $4
(D) $0.40
(E) $0.04
[Reveal] Spoiler: OA

_________________

Sandy
If you found this post useful, please let me know by pressing the Kudos Button

Try our free Online GRE Test

GMAT Club Legend
GMAT Club Legend
User avatar
Joined: 07 Jun 2014
Posts: 4750
GRE 1: Q167 V156
WE: Business Development (Energy and Utilities)
Followers: 93

Kudos [?]: 1664 [0], given: 396

CAT Tests
Re: Amy deposited $1,000 into an account that earns 8% annual in [#permalink] New post 12 Aug 2018, 05:02
Expert's post
Explanation

Both Amy and Bob start with $1,000 and earn 8% interest annually; the difference is in how often this interest is compounded. Amy’s interest is compounded twice a year at 4% each time (8% annual interest compounded 2 times a year means that she gets half the interest, or 4%, every 6 months).

Bob’s interest is compounded four times a year at 2% (8% divided by 4 times per year) each time. After 6 months, Amy has \(\$1,000 \times 1.04 = \$1,040.00\) (one interest payment at 4%) and Bob has \(\$1,000 \times (1.02)^2 = $1,040.40\) (two interest payments at 2%). The difference is \(\$1,040.40 – \$1,040.00 = \$0.40\).

Alternatively, Bob’s interest could be calculated as two separate payments. After three months, Bob will have \(\$1,000 \times 1.02 = \$1,020.00\). After 6 months, Bob will have \(\$1,020 \times 1.02 = \$1,040.40\).
_________________

Sandy
If you found this post useful, please let me know by pressing the Kudos Button

Try our free Online GRE Test

Re: Amy deposited $1,000 into an account that earns 8% annual in   [#permalink] 12 Aug 2018, 05:02
Display posts from previous: Sort by

Amy deposited $1,000 into an account that earns 8% annual in

  Question banks Downloads My Bookmarks Reviews Important topics  


cron

GRE Prep Club Forum Home| About| Terms and Conditions and Privacy Policy| GRE Prep Club Rules| Contact

Powered by phpBB © phpBB Group

Kindly note that the GRE® test is a registered trademark of the Educational Testing Service®, and this site has neither been reviewed nor endorsed by ETS®.