On July 1, 1982, Ms. Fox deposited $10,000 in a new account at the annual interest rate of 12 percent compounded monthly. If no additional deposits or withdrawals were made and if interest was credited on the last day of each month, what was the amount of money in the account on September 1, 1982?
(A) $10,200
(B) $10,201
(C) $11,100
(D) $12,100
(E) $12,544
(D) $12,100
Its option (E)$12,544
Yes Answer is E
Can you please explain. Thx
B.
Coz when they say compounded monthly it is 1 percent per month and not 12 % every month. You can also have compounded weekly, or daily or semi anually.
so the correct answer is 10,201
D is the correct answer….
at the end of 1st month it will be 1.1×10000
2nd month 1.1 x 1.1 x 10000 this is the only final answer needed…coz in two months it will be 1st sept…. so on 1st sept the balance will be 1.1 x 1.1 x 10000 = 12,100
B. Take GMAT team, please provide the answer.
B
The formula is http://qrc.depaul.edu/StudyGuide2007/Notes/Savings%20Accounts/Compound%20Interest.htm
So 10000(1+0.12/12)in power (2/12*12), this equals 10000*1.01 power 2 = 10000*1.0201 = 10201
BornFree,
1% increase is 1.01 not 1.1. So the answer is 1.01*1.01*10,000=10,201
B is the correct answer
Total = principal * (1+r)^n,
r=1% monthly
and n=2months
so Total = 10201
I agree. B is the right answer. Total of two months, 1% per month gives you $10,201 amount at the end of the second month.
Well from what the books teach , I agree its B…but take a look here…
Compounding is being done monthly as stated. and its also stated that the rate is annual. Hence the time period of compounding is 0.1666 years
hence at a yearly rate of 12% its 10000(1+0.12)^(2/12)
= apprx 10191
B GOSH I JUST NEED TO READ THE QUESTIONS MORE CARE FULLY.How let me explain i have used eliminationfor full one year interest is going to be somewhere around 1200+ but since we need for only two months its going to be 200+ so the answer is 10201 n not 10200 because interest is compound interest.I hope i have given a good enough explanation
E
B
ITS BBBBBBBBBB COOL ONE
and the answer is B
annual interest rate of 12 percent compounded monthly
1% per month of 10000 = 100 — 1st month
Compounded
1% per month of 10100 = 101 –2nd month
so the total = 10201
I think the answer is B.
b
B