DAT Quantitative Reasoning Question of the Day

1. $650
2. $675 (correct answer)
3. $700
4. $725

Explanation: When you encounter simple interest problems, remember that simple interest accumulates only on the principal amount, not on previously earned interest. The formula is: Interest = Principal × Rate × Time. Here's how to solve this step by step. You have a principal of $\$10{,}000$, an annual rate of 3% (or 0.03), and a time period of 2 years and 3 months. First, convert the time to years: 2 years + 3 months = 2 + $\frac{3}{12}$ = 2.25 years. Now apply the formula: Interest = $\$10{,}000$ × 0.03 × 2.25 = $675. This confirms answer choice B is correct. Let's examine why the other answers are wrong. Choice A ($650) represents what you'd get if you incorrectly used 2.17 years instead of 2.25 years—a common error when converting months imprecisely. Choice C ($700) would result from using 2.33 years, perhaps by miscalculating 3 months as $\frac{1}{3}$ of a year instead of $\frac{1}{4}$. Choice D ($725) might come from using 2.42 years, another time conversion error. The key strategy here is precision in time conversion. Always convert months to decimal years by dividing by 12, and double-check your arithmetic. Simple interest problems on the DAT frequently test your ability to handle fractional time periods accurately, so practice converting various month combinations to decimal years beforehand.