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]

20 Dec 2006, 14:35

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20 Dec 2006, 14:47

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, 15:46

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, 17:43

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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20 Dec 2006, 19:55

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?

[#permalink] 20 Dec 2006, 19:55

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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

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

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