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## Official Guide Explanation:Problem Solving #D21

Background

This is just one of hundreds of free explanations I've created to the quantitative questions in The Official Guide for GMAT Review (12th ed.). Click the links on the question number, difficulty level, and categories to find explanations for other problems.

These are the same explanations that are featured in my "Guides to the Official Guide" PDF booklets. However, because of the limitations of HTML and cross-browser compatibility, some mathematical concepts, such as fractions and roots, do not display as clearly online.

Question: D21
Page: 23
Difficulty: 4 (Moderately Easy)
Category 1: Word Problems > Interest Problems > Compound
Category 2: Arithmetic > Percents > other

Explanation: If an account earns 4% annual interest, compounded quarterly, it earns 1% each quarter. John started with \$10,000, and we're looking for the amount in the account 6 months later, so the account will earn 1% twice.

1% of \$10,000 is \$100, so after 3 months, the account has earned \$100 interest, for a total of \$10,100. 1% of the resulting amount is \$101, so after another three months, the account has earned an additional \$101, for a total of \$10,201, choice (D).

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