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Math Help - GRE Math

  1. #1
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    GRE Math

    I guess I have no place to put it but here.....

    Ok so...please help me understand this question....in the easiest way possible...

    A certain money market accout that has a balance of $48000 during all of the last month earned $360 in simple interest for the the month. At what simpe annual rate did the account earned interest last month?

    A. 7%
    B. 7.5%
    C. 8%
    D. 8.5%
    E. 9%

    I understand that you are supposed to use I = P R T....but are we always supposed to assume that the T is in years regardless if I and P are in months?
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  2. #2
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    I would say 360\times 12 = 4320 gives the yearly amount of potential interest earnt. Now divide this by the initial amount to get the interest rate

     \frac{4320}{48000} = 0.09 = 9\%
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  3. #3
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    Quote Originally Posted by pickslides View Post
    I would say 360\times 12 = 4320 gives the yearly amount of potential interest earnt. Now divide this by the initial amount to get the interest rate

     \frac{4320}{48000} = 0.09 = 9\%
    so they 48000 is the yearly interest. How can we tell in that problem since the units in that problem is in months?
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  4. #4
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    Interest in calculated on the amount in the account i.e $48,000. If the interest is calculated yearly but pain monthly then for it is done as follows.

    $48,000 is the monthly amount paid at 9% annually is

     9\% \times \$48,000 = \$4,320

    But this is an annual amount so to make it monthly divide by 12.

     \$4,320 \div 12 = \$ 360
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