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Jim needs $1,000 to buy a new flat-screen TV. Since he has [#permalink] ### Show Tags 09 Sep 2013, 01:29 1 This post was BOOKMARKED 00:00 Difficulty: (N/A) Question Stats: 88% (03:33) correct 12% (01:37) wrong based on 138 sessions ### HideShow timer Statistics 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 ?

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.
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has [#permalink] ### Show Tags 09 Sep 2013, 04:20 1 This post received KUDOS 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 ?

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.
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has [#permalink] ### Show Tags 10 Sep 2013, 00:22 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 ?

Similar question to practice: louie-takes-out-a-three-month-loan-of-1000-the-lender-101506.html
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has [#permalink] ### Show Tags 07 May 2016, 13:01 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 ?

EMI can be calculated by the formula

EMI = (P* R) /[1 - (100/100+R)^n]

Where P is principal, R is interest, n is number of installments.

In this case,

EMI = (993 *10/100)/[1-(10000/11000)^3] = (99.30)/[1 - (1000/1331)] =99.30/331/1331 = 1331*0.3 = 399.30