Multiple choice

Mr. James deposited a certain amount of money in a savings plan, which gives 9.5% fixed annual rate. If Mr. James has never withdrawn any money and interest has been reinvested, how much is the investment now worth? (1) The investment value of Mr. James has increased by 22%. (2) If one year ago, an amount of $900 was withdrawn, today the investment would be worth 6% less than it is actually now worth.

  1. Statement (1) ALONE is sufficient, but statement (2) alone is not sufficient.

  2. Statement (2) ALONE is sufficient, but statement (1) alone is not sufficient.

  3. BOTH statements TOGETHER are sufficient, but NEITHER statement ALONE is sufficient.

  4. EACH statement ALONE is sufficient.

  5. Statements (1) and (2) TOGETHER are NOT sufficient.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Statement (1) tells us the total growth, but not the initial amount or time. Statement (2) provides a specific scenario involving a withdrawal and a change in value, which allows for setting up an equation to solve for the principal amount. Therefore, statement (2) is sufficient.

AI explanation

Let the current value of the investment be A and the initial deposit be P, so A equals P times 1.095. Statement (1) tells us the investment increased by 22%, meaning A equals 1.22P, which only gives a relationship between A and P without yielding a specific dollar amount. Statement (2) states that subtracting $900 and its years worth of interest gives a value 6% less than A, meaning A minus 900 times 1.095 equals 0.94A. Solving this equation yields 985.5 equals 0.06A, which gives a single definitive value for the current investment A. Therefore, statement (2) alone is sufficient, but statement (1) alone is not sufficient.

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