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# Jim needs $1,000 to buy a new flat-screen TV. Since he has  Question banks Downloads My Bookmarks Reviews Important topics Author Message TAGS: Intern Joined: 09 Sep 2013 Posts: 4 Followers: 0 Kudos [?]: 0 [0], given: 0 Jim needs$1,000 to buy a new flat-screen TV. Since he has [#permalink]  09 Sep 2013, 01:29
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83% (02:19) correct 17% (01:02) wrong based on 29 sessions
Jim needs $1,000 to buy a new flat-screen TV. Since he has only$7, he borrows the remaining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)^N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?

A. $357.67 B.$375.85
C. $387.40 D.$399.30
E. $433.33 Any idea how to solve this ? I don't know the answer Last edited by Bunuel on 09 Sep 2013, 02:11, edited 1 time in total. Renamed the topic, edited the question and moved to PS forum. Manager Joined: 23 May 2013 Posts: 127 Followers: 1 Kudos [?]: 32 [0], given: 110 Re: Jim needs$1,000 to buy a new flat-screen TV. Since he has [#permalink]  09 Sep 2013, 04:20
BugDGmat wrote:
Jim needs $1,000 to buy a new flat-screen TV. Since he has only$7, he borrows the remaining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)^N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?

A. $357.67 B.$375.85
C. $387.40 D.$399.30
E. $433.33 Any idea how to solve this ? I don't know the answer L = 993 r = 0.1 C = 1.1^3 = 1.331 Insert all of these in the formula and we get P = 993*1.331*0.1/0.331 In order to resolve above without a calc, we need to find the approx value of 0.1331/0.331 ~ 0.4~ ~ 993*0.4 ~ 397 Answer D should be the one. _________________ “Confidence comes not from always being right but from not fearing to be wrong.” Math Expert Joined: 02 Sep 2009 Posts: 27170 Followers: 4226 Kudos [?]: 40945 [0], given: 5576 Re: Jim needs$1,000 to buy a new flat-screen TV. Since he has [#permalink]  10 Sep 2013, 00:22
Expert's post
BugDGmat wrote:
Jim needs $1,000 to buy a new flat-screen TV. Since he has only$7, he borrows the remaining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)^N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?

A. $357.67 B.$375.85
C. $387.40 D.$399.30
E. $433.33 Any idea how to solve this ? I don't know the answer Similar question to practice: louie-takes-out-a-three-month-loan-of-1000-the-lender-101506.html _________________ Re: Jim needs$1,000 to buy a new flat-screen TV. Since he has   [#permalink] 10 Sep 2013, 00:22
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