We cover every section of the GMAT with in-depth lessons, 5000+ practice questions and realistic practice tests.

## Up to 90+ points GMAT score improvement guarantee

### The best guarantee you’ll find

Our Premium and Ultimate plans guarantee up to 90+ points score increase or your money back.

## Master each section of the test

### Comprehensive GMAT prep

We cover every section of the GMAT with in-depth lessons, 5000+ practice questions and realistic practice tests.

## Schedule-free studying

### Learn on the go

Study whenever and wherever you want with our iOS and Android mobile apps.

# Interest: Compound Interest

Adam and Joan each deposited \$100 in their savings accounts. If Adam earns $$x$$% simple interest and Joan earns $$x$$% interest compounded annually, what is the difference between the interest earned by Adam and Joan after the first year in terms of $$x$$?
Incorrect. [[Snippet]]
Incorrect. [[Snippet]]
Incorrect. [[Snippet]]
Incorrect. [[Snippet]]
Correct.
Remember that the interest earned for the _first_ time period for any amount is the same for both _simple_ and _compound_ interest. This is so because the amount to which interest is applied is the same in both cases. The interest earned for both cases will differ only for future time periods. Since the interest in Joan's account is only compounded annually, there is no difference between the two accounts after a single year, so the correct answer is D. No need to even calculate!
$$\100x$$
$$\x$$
$$\\frac{x}{10}$$
$$\\frac{x}{100}$$
$$\0$$