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Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?
- a)$ 506.00
- b)$726.24
- c)$900.00
- d)$920.24
- e)$926.24
Correct answer is option 'E'. Can you explain this answer?
Verified Answer
Jolene entered an 18-month investment contract that guarantees to pay ...
The investment contract guarantees to make three interest payments:
$10,000 (initial investment)
+ $200 (1% interest on $10,000 principal
= $100, so 2% = 2 × $100) = $10,200
⇒ $10,200 + $306 (1% interest on $10,200 principal = $102, so 3% = 3 × $102) = $10,506
⇒ + $420.24 (1% interest on $10,506 principal = $105.06, so 4% = 4 × $105.06) = $10,926.24
The final value is $10,926.24 after an initial investment of $10,000. Thus, the total amount of interest paid is $926.24 (the difference between the final value and the amount invested).
The correct answer is E.
$10,000 (initial investment)
+ $200 (1% interest on $10,000 principal
= $100, so 2% = 2 × $100) = $10,200
⇒ $10,200 + $306 (1% interest on $10,200 principal = $102, so 3% = 3 × $102) = $10,506
⇒ + $420.24 (1% interest on $10,506 principal = $105.06, so 4% = 4 × $105.06) = $10,926.24
The final value is $10,926.24 after an initial investment of $10,000. Thus, the total amount of interest paid is $926.24 (the difference between the final value and the amount invested).
The correct answer is E.
Most Upvoted Answer
Jolene entered an 18-month investment contract that guarantees to pay ...
Given:
- Initial investment: $10,000
- Investment contract duration: 18 months
- Interest rate for the first 6 months: 2%
- Interest rate for the next 6 months: 3%
- Interest rate for the final 6 months: 4%
To find:
- Total amount of interest paid during the 18-month contract
Solution:
Interest Calculation:
To calculate the interest for each period, we will use the formula:
Interest = Principal * Rate
Calculating Interest for the First 6 Months:
Principal = $10,000
Rate = 2% = 0.02
Interest for the first 6 months = $10,000 * 0.02 = $200
Calculating Interest for the Next 6 Months:
For the next 6 months, the principal will be the initial investment plus the interest earned in the first 6 months.
Principal = $10,000 + $200 = $10,200
Rate = 3% = 0.03
Interest for the next 6 months = $10,200 * 0.03 = $306
Calculating Interest for the Final 6 Months:
For the final 6 months, the principal will be the initial investment plus the interest earned in the first 12 months.
Principal = $10,000 + $200 + $306 = $10,506
Rate = 4% = 0.04
Interest for the final 6 months = $10,506 * 0.04 = $420.24
Total Interest:
Total interest paid during the 18-month contract = Interest for the first 6 months + Interest for the next 6 months + Interest for the final 6 months
= $200 + $306 + $420.24
= $926.24
Answer:
The total amount of interest paid during the 18-month contract will be $926.24 (Option E).
- Initial investment: $10,000
- Investment contract duration: 18 months
- Interest rate for the first 6 months: 2%
- Interest rate for the next 6 months: 3%
- Interest rate for the final 6 months: 4%
To find:
- Total amount of interest paid during the 18-month contract
Solution:
Interest Calculation:
To calculate the interest for each period, we will use the formula:
Interest = Principal * Rate
Calculating Interest for the First 6 Months:
Principal = $10,000
Rate = 2% = 0.02
Interest for the first 6 months = $10,000 * 0.02 = $200
Calculating Interest for the Next 6 Months:
For the next 6 months, the principal will be the initial investment plus the interest earned in the first 6 months.
Principal = $10,000 + $200 = $10,200
Rate = 3% = 0.03
Interest for the next 6 months = $10,200 * 0.03 = $306
Calculating Interest for the Final 6 Months:
For the final 6 months, the principal will be the initial investment plus the interest earned in the first 12 months.
Principal = $10,000 + $200 + $306 = $10,506
Rate = 4% = 0.04
Interest for the final 6 months = $10,506 * 0.04 = $420.24
Total Interest:
Total interest paid during the 18-month contract = Interest for the first 6 months + Interest for the next 6 months + Interest for the final 6 months
= $200 + $306 + $420.24
= $926.24
Answer:
The total amount of interest paid during the 18-month contract will be $926.24 (Option E).
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Question Description
Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?a)$ 506.00b)$726.24c)$900.00d)$920.24e)$926.24Correct answer is option 'E'. Can you explain this answer? for GMAT 2025 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?a)$ 506.00b)$726.24c)$900.00d)$920.24e)$926.24Correct answer is option 'E'. Can you explain this answer? covers all topics & solutions for GMAT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?a)$ 506.00b)$726.24c)$900.00d)$920.24e)$926.24Correct answer is option 'E'. Can you explain this answer?.
Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?a)$ 506.00b)$726.24c)$900.00d)$920.24e)$926.24Correct answer is option 'E'. Can you explain this answer? for GMAT 2025 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?a)$ 506.00b)$726.24c)$900.00d)$920.24e)$926.24Correct answer is option 'E'. Can you explain this answer? covers all topics & solutions for GMAT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?a)$ 506.00b)$726.24c)$900.00d)$920.24e)$926.24Correct answer is option 'E'. Can you explain this answer?.
Solutions for Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?a)$ 506.00b)$726.24c)$900.00d)$920.24e)$926.24Correct answer is option 'E'. Can you explain this answer? in English & in Hindi are available as part of our courses for GMAT.
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ample number of questions to practice Jolene entered an 18-month investment contract that guarantees to pay 2 percent interest at the end of 6 months, another 3 percent interest at the end of 12 months, and 4 percent interest at the end of the 18 month contract. If each interest payment is reinvested in the contract, and Jolene invested $10,000 initially, what will be the total amount of interest paid during the 18-month contract?a)$ 506.00b)$726.24c)$900.00d)$920.24e)$926.24Correct answer is option 'E'. Can you explain this answer? tests, examples and also practice GMAT tests.
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