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Maria deposited $10,000 in a savings account at 5 percent an

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Hyeyoung
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Maria deposited $10,000 in a savings account at 5 percent an [#permalink] Maria deposited $10,000 in a savings account at 5 percent an   19 Oct 2023, 22:22
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Maria deposited $10,000 in a savings account at 5 percent annual interest compounded quarterly. If instead she had deposited the $10,000 in a three-month money market account at 14 percent simple annual interest, how much more interest would the $10,000 have earned at the end of three months?

(A) $ 150
(B) $ 225
(C) $ 325
(D) $ 900
(E) $ 1,275

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DanTheGMATMan
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Re: Maria deposited $10,000 in a savings account at 5 percent an [#permalink] Maria deposited $10,000 in a savings account at 5 percent an   22 Oct 2023, 10:15
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For the first deposit, 5 percent annual, compounded quarterly, means the interest rate is 1.25 percent per quarter. 3 months (one quarter) interest is then 10000 * \(\frac{1.25}{100}\) = 125


The second deposit needs to be clarified, but I take it to be 14 percent annually, compounded quarterly, so 14/4 percent per quarter. After one quarter the interest will be
10000*\(\frac{(14)}{(4*100)}\) = 350

350-125 = 225

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Hyeyoung
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Re: Maria deposited $10,000 in a savings account at 5 percent an [#permalink] Maria deposited $10,000 in a savings account at 5 percent an   23 Oct 2023, 11:30
Hi~
Thank you for your help.
I don’t understand clearly that why did you divide 4 in the first and multiply 4 in the second?

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DanTheGMATMan
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Re: Maria deposited $10,000 in a savings account at 5 percent an [#permalink] Maria deposited $10,000 in a savings account at 5 percent an   23 Oct 2023, 15:54
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Hyeyoung wrote:
Hi~
Thank you for your help.
I don’t understand clearly that why did you divide 4 in the first and multiply 4 in the second?

Posted from my mobile device


Hey I divided them both by 4. In the first scenario the quarterly rate is 5/4 or 1.25, and in the second scenario the rate is 14/4. Hope its more clear
gmatclubot
Re: Maria deposited $10,000 in a savings account at 5 percent an [#permalink]
23 Oct 2023, 15:54
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