Register    Login    Search    Rss Feeds

Forums Home » Ask An Instructor » GMAT Math » Manhattan GMAT Math Strategy Guides


 Page 1 of 1 [ 2 posts ] 



  Print view Print view Previous topic Previous topic | Next topic Next topic
 

FDP's. Question Banks FDPs # 3

Author Message
david_malomo
 Post subject: FDP's. Question Banks FDPs # 3
 Post Posted: Thu Feb 19, 2009 1:34 pm 
Offline
Course Students


Posts: 8
This is question 3 of the FDP question banks. I still don't understand how D=100 is the correct answer.

Question.
Donald plans to invest x dollars in a savings account that pays interest at an annual rate of 8% compounded quarterly. Approximately what amount is the minimum that Donald will need to invest to earn over $100 in interest within 6 months?

a) 1500
b) 1750
c) 2000
D) 2500
E) 3000

I don't understand how D which is 100 is the correct answer. This question says what do you need to invest to get over $100 in interest. 100 is not over 100, it is exactly 100.
Top 
esledge
 Post subject: Re: FDP's. Question Banks FDPs # 3
 Post Posted: Sun Feb 22, 2009 4:03 pm 
Offline
ManhattanGMAT Staff


Posts: 901
Location: St. Louis, MO
"an annual rate of 8% compounded quarterly" means he gets a payment of 2% each quarter. Each interest payment, along with his original principal, earns 2% the next quarter.

Here's what happens if Donald invests $2500:
Beginning: $2500
after 3 months: $2500+$50 = $2550
after 6 months: $2550 +$51 = $2601 ($51 = 2% of $2550)

He received a total of $50 + $51 = $101 in interest.

_________________
Emily Sledge
Instructor
ManhattanGMAT
Top 
Display posts from previous:  Sort by  
 
 Page 1 of 1 [ 2 posts ] 





Who is online

Users browsing this forum: No registered users and 1 guest

 
 

 
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot post attachments in this forum

Search for:
Jump to: