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Louie takes out a three-month loan of $1000. The lender [#permalink] ### Show Tags 20 Dec 2006, 13:35 1 This post received KUDOS 4 This post was BOOKMARKED 00:00 Difficulty: 95% (hard) Question Stats: 24% (03:15) correct 76% (01:24) wrong based on 86 sessions ### HideShow timer Statistics 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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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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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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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 $443 neither one is showing up in the choices gmat_enthus: you got the same answer as mine, how come u picked D ? Intern Joined: 24 Feb 2006 Posts: 48 Followers: 1 Kudos [?]: 1 [0], given: 0 [#permalink] ### Show Tags 20 Dec 2006, 18:55 Got C Let say she pays$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

whats the OA?
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Re: Louie takes out a three-month loan of $1000. The lender [#permalink] ### Show Tags 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.

Thank you
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Re: Louie takes out a three-month loan of $1000. The lender [#permalink] ### Show Tags 11 Oct 2013, 01:57 Expert's post 2 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.

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: $$(1,210-2.1x)*1.1-x=0$$ --> $$1331=3.31x$$ --> $$x\approx{402}$$

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