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Louie takes out a three-month loan of $1000. The lender

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Louie takes out a three-month loan of $1000. The lender [#permalink] New post 20 Dec 2006, 13:35
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Question Stats:

12% (04:01) correct 88% (01:20) wrong based on 50 sessions
Louie takes out a three-month loan of $1000. The lender charges him 10% interest per month compunded monthly. The terms of the loan state that Louie must repay the loan in three equal monthly payments. To the nearest dollar, how much does Louie have to pay each month?

A. 333
B. 383
C. 402
D. 433
E. 483

OPEN DISCUSSION OF THIS QUESTION IS HERE: louie-takes-out-a-three-month-loan-of-1000-the-lender-101506.html
[Reveal] Spoiler: OA

Last edited by Bunuel on 11 Oct 2013, 01:56, edited 1 time in total.
Edited the question and added the OA.
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 [#permalink] New post 20 Dec 2006, 13:47
Louie takes out a three-month loan of $1000. The lender charges him 10% interest per month compunded monthly. The terms of the loan state that Louie must repay the loan in three equal monthly payments. To the nearest dollar, how much does Louie have to pay each month?

(A) 333
(B) 383
(C) 402
(D) 433
(E) 483

For 3 mths amount will be 1000(1 + 10/100)^3 = 1000(1.1)^3 = 1000 * 1.331 = 1331

Louie will have to pay 1331/3 = $443 so I think its D?
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 [#permalink] New post 20 Dec 2006, 14:46
getting D too

1000 to 1100 to 1200 (approx) to 1300 (approx)
per month payment = 1300/3 = 433
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 [#permalink] New post 20 Dec 2006, 16:43
Hmm ,, i am confused .. the answer isn't showing in the answer choices

I got Amount = 1000 * ( 1 + 0.1 )^3
= 1000 * 1.1^3 = 1000 * 1.331
SO, total amount to pay is $ 1331

in three equal payments, each month he must pay 1331/3 ~ $ 444 or $443

neither one is showing up in the choices

gmat_enthus: you got the same answer as mine, how come u picked D ?
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 [#permalink] New post 20 Dec 2006, 18:55
Got C
Let say she pays $X per month.
interest for month 1 = 1000*10/100
= 100

interest for month 2 = (1000+100 -X)*10/100
= (1100 - X)*10/100
= 110 - X/10

interest for month 3 = (1100 -X + 110 - X/10 - X)*10/100
= 121 - 21/100 X

Total interest = 3X-1000
So 3X-1000 = 100 + 110 - X/10 + 121 - 21/100 X
=>331X = 133100
=>X = 402.11

(C) best answer ..
whats the OA?
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Re: Louie takes out a three-month loan of $1000. The lender [#permalink] New post 10 Oct 2013, 13:16
mm007 wrote:
Louie takes out a three-month loan of $1000. The lender charges him 10% interest per month compunded monthly. The terms of the loan state that Louie must repay the loan in three equal monthly payments. To the nearest dollar, how much does Louie have to pay each month?

(A) 333
(B) 383
(C) 402
(D) 433
(E) 483


Has anyone found a good approach for these types of questions?
I remember that generally we'll have something like :

1000 - 10 = 900 - x
(900 -x (0.9) ) - x
((900 - x(0.9) - x ) 0.9 ) - x = 0

Solve last equation to get the value of X.
But its a painful method, experts please advice

Thank you
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Re: Louie takes out a three-month loan of $1000. The lender [#permalink] New post 11 Oct 2013, 01:57
Expert's post
1
This post was
BOOKMARKED
jlgdr wrote:
mm007 wrote:
Louie takes out a three-month loan of $1000. The lender charges him 10% interest per month compunded monthly. The terms of the loan state that Louie must repay the loan in three equal monthly payments. To the nearest dollar, how much does Louie have to pay each month?

(A) 333
(B) 383
(C) 402
(D) 433
(E) 483


Has anyone found a good approach for these types of questions?
I remember that generally we'll have something like :

1000 - 10 = 900 - x
(900 -x (0.9) ) - x
((900 - x(0.9) - x ) 0.9 ) - x = 0

Solve last equation to get the value of X.
But its a painful method, experts please advice

Thank you


Let the monthly payment be x.

After the 1st month there will be 1,000*1.1-x dollars left to repay;
After the 2nd month there will be (1,000*1.1-x)*1.1-x=1,210-2.1x dollars left to repay;
After the 3rd month there should be 0 dollars left to repay: (1,210-2.1x)*1.1-x=0 --> 1331=3.31x --> x\approx{402}

Answer: C.

OPEN DISCUSSION OF THIS QUESTION IS HERE: louie-takes-out-a-three-month-loan-of-1000-the-lender-101506.html
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Re: Louie takes out a three-month loan of $1000. The lender   [#permalink] 11 Oct 2013, 01:57
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