GMAT Question of the Day - Daily to your Mailbox; hard ones only

 It is currently 18 Oct 2018, 04:32

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# A loan has a variable interest rate that fluctuates between 5% and 9%

Author Message
TAGS:

### Hide Tags

Math Expert
Joined: 02 Sep 2009
Posts: 49993
A loan has a variable interest rate that fluctuates between 5% and 9%  [#permalink]

### Show Tags

25 Jul 2018, 00:44
00:00

Difficulty:

25% (medium)

Question Stats:

82% (01:30) correct 18% (01:38) wrong based on 38 sessions

### HideShow timer Statistics

A loan has a variable interest rate that fluctuates between 5% and 9% of the base payment per month. If base payments remain at $250 each month and an additional monthly surcharge of 1% is added to the combined (base + interest), what would be the greatest possible payment due in any given month? A.$262.50
B. $265.13 C.$272.50
D. $275.23 E.$286.13

_________________
Math Expert
Joined: 02 Aug 2009
Posts: 6958
Re: A loan has a variable interest rate that fluctuates between 5% and 9%  [#permalink]

### Show Tags

25 Jul 2018, 01:23
Bunuel wrote:
A loan has a variable interest rate that fluctuates between 5% and 9% of the base payment per month. If base payments remain at $250 each month and an additional monthly surcharge of 1% is added to the combined (base + interest), what would be the greatest possible payment due in any given month? A.$262.50
B. $265.13 C.$272.50
D. $275.23 E.$286.13

so we take the MAX values..
so BASE payment = 250 and interest rate = 9%
so 250*1.09 but 1% on top = $$250*1.09*1.01$$

since you are looking at slight dispersed choices, we can approximate and find answer
9% ~ 10% so 10% of 250 = $$250*\frac{10}{100}=25$$
so slightly less than 275 add 1% to it so $$275+2.75 = 277.75$$
so our answer has to be closer and < 277
only D is left
_________________

1) Absolute modulus : http://gmatclub.com/forum/absolute-modulus-a-better-understanding-210849.html#p1622372
2)Combination of similar and dissimilar things : http://gmatclub.com/forum/topic215915.html
3) effects of arithmetic operations : https://gmatclub.com/forum/effects-of-arithmetic-operations-on-fractions-269413.html

GMAT online Tutor

Intern
Joined: 10 Feb 2018
Posts: 12
Location: United States (TX)
Schools: McCombs '21 (S)
GMAT 1: 690 Q40 V44
GPA: 3.58
Re: A loan has a variable interest rate that fluctuates between 5% and 9%  [#permalink]

### Show Tags

25 Jul 2018, 19:25
1
Bunuel wrote:
A loan has a variable interest rate that fluctuates between 5% and 9% of the base payment per month. If base payments remain at $250 each month and an additional monthly surcharge of 1% is added to the combined (base + interest), what would be the greatest possible payment due in any given month? A.$262.50
B. $265.13 C.$272.50
D. $275.23 E.$286.13

Can someone explain this one to me using a different method or point out the error in my thinking?

Use max value of 9% interest to calculate base and then add 1% interest to that value

Base payment + Base interest + Additional interest = Total

250 + .09(250) + (.01(.09(250)) =250 + 22.5 + .225 = 272.725
Senior SC Moderator
Joined: 22 May 2016
Posts: 2033
A loan has a variable interest rate that fluctuates between 5% and 9%  [#permalink]

### Show Tags

27 Jul 2018, 19:33
1
jch103020 wrote:
Bunuel wrote:
A loan has a variable interest rate that fluctuates between 5% and 9% of the base payment per month. If base payments remain at $250 each month and an additional monthly surcharge of 1% is added to the combined (base + interest), what would be the greatest possible payment due in any given month? A.$262.50
B. $265.13 C.$272.50
D. $275.23 E.$286.13

Can someone explain this one to me using a different method or point out the error in my thinking?

Use max value of 9% interest to calculate base and then add 1% interest to that value

Base payment + Base interest + Additional interest = Total

250 + .09(250) + (.01(.09(250)) =250 + 22.5 + .225 = 272.725

jch103020 , easy mistake.

The "additional interest" does not work because you are charging 1% on interest only:
(.09)(250) = $22.50, and ($22.50 *.01) = $0.225 The extra 1% should be charged on base + interest: 1.09(250) =$272.50

So either
Base payment + Base interest + Additional interest (1% on base payment PLUS base interest) = Total

250 + .09(250) + (.01*(1.09*(250)) = (250 + 22.5 + 2.725) = $275.225 OR Add your first two terms:$250 + $22.50 =$272.50
1% on that amount: (.01)($272.5) =$2.725
($250 +$22.50 + $2.725) =$275.225

If you think about multiplying decimals, it makes sense. (.01*.09) = .0009. You've charged 9/100th of a percent (.09%) on \$250

Hope that helps.
_________________

The only thing more dangerous than ignorance is arrogance.
-- Albert Einstein

A loan has a variable interest rate that fluctuates between 5% and 9% &nbs [#permalink] 27 Jul 2018, 19:33
Display posts from previous: Sort by