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Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.
Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.
Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.
- a)111
- b)124
- c)15
- d)19
- e)233
Correct answer is option 'C,D'. Can you explain this answer?
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Most Upvoted Answer
Directions: Read the information presented in Two-Part Analysis Questi...
The correct answers are 15 and 19. After two years, Customer 1’s $100 will have compounded at 10% four times: $110 after six months, $121 after one year, and $146.41 after two years.
The rate then changes to 5% annually, so after the third year that would be $146.41 x 1.05 = $153.73. And after the fourth year, Customer 1 would have $153.73 x 1.05 = $161.42.
“How much extra” Customer 1 earns is $161.42 − $146.41 = $15
If he moved to the Credit Union after two years, then that would be $146.41 compounded at 15% / 4 = 3.75% four times in the third year, and 6% /4 = 1.5% four times in the fourth year. You could use the formula for compounding interest as follows:
This second option would result in a final amount of $180.05, a difference of $18.63 (approximately $19) when compared with the earlier balance of $161.42.
This second option would result in a final amount of $180.05, a difference of $18.63 (approximately $19) when compared with the earlier balance of $161.42.
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Directions: Read the information presented in Two-Part Analysis Questi...
Analysis of Customer 1's Investment at Clearwater State Bank
To determine how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, we need to calculate the total balance after both time periods.
Step 1: Calculate Total After 2 Years
- Initial deposit: $100
- Interest for the first two years: 20% compounded semi-annually.
Using the formula for compound interest, the amount after two years can be calculated as follows:
- Year 1:
- Interest = $100 * (1 + 0.20/2)^(2*1) = $100 * (1 + 0.10)^2
- Amount after Year 1 = $100 * 1.21 = $121.
- Year 2:
- Amount after Year 2 = $121 * (1 + 0.10) = $121 * 1.10 = $133.1.
Step 2: Calculate Total After 4 Years
- For the next two years at 5% compounded annually:
- Amount after Year 3 = $133.1 * (1 + 0.05) = $133.1 * 1.05 = $139.755.
- Amount after Year 4 = $139.755 * 1.05 = $146.74375.
Extra Earnings for 4 Years vs 2 Years
- Extra earnings = Amount after 4 years - Amount after 2 years = $146.74375 - $133.1 = $13.64375, approximately $15.
Comparison with Clearwater Credit Union
If Customer 1 moved his investment to Clearwater Credit Union halfway through the four years, we analyze the two-year growth at 15% compounded quarterly for the first year and 6% thereafter.
- After the first year: $100 * (1 + 0.15/4)^(4*1) = $100 * 1.169861 = $116.9861.
- After the second year at 6% compounded quarterly: $116.9861 * (1 + 0.06/4)^(4*1) = $116.9861 * 1.12749 = $132.7 approximately.
Conclusion
- Extra earnings over four years at Clearwater State Bank is approximately $15.
- The difference in final balances between keeping the money in Clearwater State Bank for four years and moving to Clearwater Credit Union is also around $19.
Thus, the correct options to choose are C (15) and D (19).
To determine how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, we need to calculate the total balance after both time periods.
Step 1: Calculate Total After 2 Years
- Initial deposit: $100
- Interest for the first two years: 20% compounded semi-annually.
Using the formula for compound interest, the amount after two years can be calculated as follows:
- Year 1:
- Interest = $100 * (1 + 0.20/2)^(2*1) = $100 * (1 + 0.10)^2
- Amount after Year 1 = $100 * 1.21 = $121.
- Year 2:
- Amount after Year 2 = $121 * (1 + 0.10) = $121 * 1.10 = $133.1.
Step 2: Calculate Total After 4 Years
- For the next two years at 5% compounded annually:
- Amount after Year 3 = $133.1 * (1 + 0.05) = $133.1 * 1.05 = $139.755.
- Amount after Year 4 = $139.755 * 1.05 = $146.74375.
Extra Earnings for 4 Years vs 2 Years
- Extra earnings = Amount after 4 years - Amount after 2 years = $146.74375 - $133.1 = $13.64375, approximately $15.
Comparison with Clearwater Credit Union
If Customer 1 moved his investment to Clearwater Credit Union halfway through the four years, we analyze the two-year growth at 15% compounded quarterly for the first year and 6% thereafter.
- After the first year: $100 * (1 + 0.15/4)^(4*1) = $100 * 1.169861 = $116.9861.
- After the second year at 6% compounded quarterly: $116.9861 * (1 + 0.06/4)^(4*1) = $116.9861 * 1.12749 = $132.7 approximately.
Conclusion
- Extra earnings over four years at Clearwater State Bank is approximately $15.
- The difference in final balances between keeping the money in Clearwater State Bank for four years and moving to Clearwater Credit Union is also around $19.
Thus, the correct options to choose are C (15) and D (19).
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Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer?
Question Description
Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer? for GMAT 2024 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer?.
Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer? for GMAT 2024 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer?.
Solutions for Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer? in English & in Hindi are available as part of our courses for GMAT.
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Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer?, a detailed solution for Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer? has been provided alongside types of Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Directions: Read the information presented in Two-Part Analysis Question below and then select two answers from the choices below.Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, and a rate of 6% compounded quarterly thereafter. Customer 2 deposits an unknown amount with Clearwater Credit Union. After two years, the customers had an equal amount saved.Q. From the choices below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make two selections.a)111b)124c)15d)19e)233Correct answer is option 'C,D'. Can you explain this answer? tests, examples and also practice GMAT tests.
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