Radhika is refinancing a business loan and is considering 2 different : Two-part Analysis

amirsalehi

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Radhika is refinancing a business loan and is considering 2 different [#permalink]

Updated on: 29 Sep 2023, 02:58

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Radhika is refinancing a business loan and is considering 2 different loan offers. Under Offer 1, the loan’s initial principal would be $190,000, and she would pay down $1,250 in principal with each monthly payment during the first year of the loan. Under Offer 2, $4,000 in refinancing fees would be added to bring the principal to $194,000, but she would pay down $1,775 in principal with each monthly payment during the first year of the loan.

In the first column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 1. In the second column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 2. Make only two selections, one in each column.

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Originally posted by amirsalehi on 23 Aug 2014, 11:09.
Last edited by BottomJee on 29 Sep 2023, 02:58, edited 8 times in total.

Updated - Complete topic (150).

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Shrivathsan

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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]

27 Jun 2016, 21:05

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wadbarzain wrote:

Radhika is refinancing a business loan and is considering 2 different loan offers. Under Offer 1, the loan's initial principal would be $190,000, and she would pay down $1,250 in principal with each monthly payment during the first year of the loan. Under Offer 2, $4,000 in refinancing fees would be added to bring the principal to $194,000, but she would pay down $1,775 in principal with each monthly payment during the first year.

In the first column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 1. In the second column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 2. Make only two selections, one in each column.

$168,700
$171,000
$172,700
$175,000
$176,700
$179,000

Show Spoiler

Offer 1: $175,000 Offer 2: $172,700

Pretty simple Q.
Offer 1 :
P=1250 ; months : 12 ; amount to repay : 190000
amount remain after 12 months.
190000-(12*1250) = 175000

Offer 2 :
P=1775; months : 12 ; amount to repay : 194000
amount remain after 12 months.
194000-(12*1775) = 172700

--------------------------------
Shrivathsan

marciful

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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]

24 Aug 2014, 09:53

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amirsalehi wrote:

Hi there,
Can anyone help me with this IR question?

Offer 1 Offer 2
190,000 Principal 194,000
1,250 Monthly Principal Payments 1,775
15,000 Total Principal Payments after Year 1 21,300
175,000 Principal remaining after Year 1 172,700

D

Apt0810

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Joined: 15 Jul 2018

Posts: 349

Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]

19 Oct 2019, 09:41

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Option 1: Amount remaining after 1 year = 190000-(12*1250) = 175000

Option 2:Amount remaining after 1 year = 194000-(12*1775) = 172700

Posted from my mobile device

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TheNightKing

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Joined: 18 Dec 2017

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GMAT 1: 600 Q46 V27 Verified score

Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]

19 Oct 2019, 16:38

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Quote:

Radhika is refinancing a business loan and is considering 2 different loan offers. Under Offer 1, the loan's initial principal would be $190,000, and she would pay down $1,250 in principal with each monthly payment during the first year of the loan. Under Offer 2, $4,000 in refinancing fees would be added to bring the principal to $194,000, but she would pay down $1,775 in principal with each monthly payment during the first year.

In the first column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 1. In the second column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 2. Make only two selections, one in each column.

A. $168,700
B. $171,000
C. $172,700
D. $175,000
E. $176,700
F. $179,000

Offer 1 :
Principal Amount = 1,90,000
Per Month = 1250
12 Months = 12*1250=12500+2500=15000
Balance = 190000-15000 = 175000

Offer 2 :
Principal Amount = 1,94,000
Per Month = 1775
12 Months = 12*1775=17750+3550=21,300
Balance = 194000-21300 = 1,72,700

So Option D and option C.

B

ishitaz

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Joined: 25 Aug 2020

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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]

08 Nov 2020, 04:14

Hi, one doubt. Why didn't we include refinance fees in the principal as mentioned in the question for Offer2?

B

Ansh13

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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]

10 Nov 2020, 12:46

ishitaz wrote:

Hi, one doubt. Why didn't we include refinance fees in the principal as mentioned in the question for Offer2?

ishitaz - The refinance fees is already added in the principal in Offer 2. The principal amount of $194,000 in Offer 2 is inclusive of the $4000 refinancing fees. The questions says -

Quote:

....Under Offer 2, $4,000 in refinancing fees would be added to bring the principal to $194,000, but she would....

This means that the $4000 refinancing fees when added to the principal, brings the total value of principal to $194,000.

Hope that clears your doubt.

B

scranjith

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Joined: 09 Jan 2021

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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]

04 Mar 2021, 09:03

Offer 1: Amount remaining after 1 year = 190000-(12*1250) = 175000

Offer 2: Amount remaining after 1 year = 194000-4000-(12*1775) = 168700

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bumpbot

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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]

24 Feb 2024, 15:08

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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]

24 Feb 2024, 15:08

Principal remaining after 12 months under Offer 1	Principal remaining after 12 months under Offer 2	Amount
		$168,700
		$171,000
		$172,700
		$175,000
		$176,700
		$179,000

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