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

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CEO
CEO
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Joined: 21 Jan 2007
Posts: 2760
Location: New York City
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Louie takes out a three-month loan of $1000. The lender [#permalink] New post 18 Dec 2007, 08:18
This topic is locked. If you want to discuss this question please re-post it in the respective forum.

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
Senior Manager
Senior Manager
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Joined: 06 Aug 2007
Posts: 368
Followers: 1

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Re: compound interest [#permalink] New post 18 Dec 2007, 17:41
bmwhype2 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


I am getting $443 per month.
Manager
Manager
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Joined: 03 Sep 2006
Posts: 233
Followers: 1

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 [#permalink] New post 18 Dec 2007, 18:33
1 month: 1100
2 month: 1210
3 month: 1331
each month: 1331 / 3 ~ 433
Manager
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Posts: 121
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 [#permalink] New post 19 Dec 2007, 11:41
Isn't it 402 assuming that the payments are made after the loan is taken, while interest is accuing.

Month 1: 1100
Minus 1st payment of 402: 698
Month 2: 698*1.1=768
Minus 2nd payment of 402: 365
Month 3: 365*1.1=402
Minus last payment: 0

What is the OA?
  [#permalink] 19 Dec 2007, 11:41
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Louie takes out a three-month loan of $1000. The lender

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