abehrman wrote:if $1,000 is deposited in a certain bank account and remains in the account along with any accrued interest, the dollar amount of interest, I, earned by deposit in the first n years is given by:
I = 1,000 ((1+r/100)^n -1)
where r percent is the annual interest rate paid by the bank. Is the annual interest rate paid by the bank > 8%?
1) the deposit earns a total of $210 in interest in the first 2 years.
2) (1+r/100)^2 > 1.15
I know 1 is sufficient, why is 2 insufficient? You can solve for r.
Lets work with statement second !!!
Given the exponent power is 2 that means n=3 (3 years).
Now 1.15 here indicates that in 3 years the investment has increased by more than 15%
That would approximately give around 5% of annual return (although thats not true in
case of compounding interest, but would serve the purpose). Obviously since the return
has been shown as greater than 15% for 3 years that means we can have both less
than 8% per year (like 5% here) or even 10% if its 1.21 and not 1.15 on the right hand
Statement 2 is therefore insufficient !!!
We dnt need to solve for square roots of 1.15 or something, GMAT never requires that.
Hope this helps !!!