Got the basics of the Integrated Reasoning formats, and ready to start with some questions? The Two-Part Analysis question is one of the most straight-forward IR question types. A short paragraph is followed by information in columns and rows. You’ll be asked to choose one answer from each column since the complete answer will have a “two-part” solution. Let’s look at a sample Two-Part Analysis question!
Question 1 – Clearwater State Bank is offering an introductory 20% interest rate on a new account, which will compound semi-annually for the first two years, then compound 5% annually thereafter. Customer 1 deposits $100 in that account to start. To compete, Clearwater Credit Union is offering a similar offer. Their newest account offers an introductory rate of 15% compounded quarterly for the first year, then compounded at 6% quarterly thereafter. After two years, the customers had an equal amount saved.
In the table below, identify approximately how much extra Customer 1 would earn by keeping his money in Clearwater State Bank for four years versus two years, and also identify the difference in the final balances if he moved his investment to Clearwater Credit Union halfway through the four years. Make only one selection in each column.
1st Balance Difference 2nd Balance Difference
A _______ _______
B _______ _______
C _______ _______
STEP 1 – Pull out the given info.
You’ll need to read these questions carefully, as you would any word problem, and extract the necessary values and relationships before proceeding.
After two years, Customer 1’s $100 will have compounded at 20% four times: $120 after six months, $144 after one year, $172.80 after eighteen months, and $207.36 after two years.
The rate then changes to 5% annually, so after the third year that would be $207.36 * 1.04 = $215.65. And after the fourth year, Customer 1 would have $215.65 * 1.04 = $224.28.
“How much extra” Customer 1 earns is $224.28 – $207.36 = $16.92, or close to $17.
STEP 2 – Make a chart, if needed.
Most of the relationships in Two Part Analysis reflect changes in values over time. You may find it helpful to make a chart:
For example, if he moved to the Credit Union after two years, then that would be $207.36 compounded at 15% four times in the third year, and 6% four times in the fourth year.
$207.36 * 1.15 = $238.46
$238.46 * 1.15 = $274.23
$274.23 * 1.15 = $315.37
$315.37 * 1.15 = $362.67
$362.67 * 1.06 = $384.43
$384.43 * 1.06 = $407.50
$407.50 * 1.06 = $431.95
$431.95 * 1.06 = $457.87.
This second option would result in a final amount of $457.87, a difference of $233.59 when compared with the earlier balance of $224.28. The correct answer is 17 and 233.
Want to know where to focus your GMAT studies next? Challenge yourself with practice sessions in the Veritas Prep question-bank!
Vivian Kerr is a regular contributor to the Veritas Prep blog, providing tips and tricks to help students better prepare for the GMAT and the SAT.