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17 Feb 2024, 03:28
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Repayment amount : 1.00n
Loan proceeds : 0.85n
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
38% (02:15) correct
62%
(02:44)
wrong
based on 342
sessions
History
Date
Time
Result
Not Attempted Yet
Advertisement: Our new 15/12 discount loan is perfect for quick business projects. Customers can borrow an amount up to 80% of the value of their collateral assets at 15% discounted interest and have 12 months to repay the loan amount.*
*Terms of loan: Loan proceeds, paid by check in rupees, are equal to the loan amount less the total interest for the loan—15% of the loan amount.
A 15/12 loan with amount n rupees is taken out by a business. Select the expressions for the repayment amount (the sum of the payments made to fully repay the loan) and the loan proceeds for this loan. Make only two selections, one in each column.
*Terms of loan: Loan proceeds, paid by check in rupees, are equal to the loan amount less the total interest for the loan—15% of the loan amount.
A 15/12 loan with amount n rupees is taken out by a business. Select the expressions for the repayment amount (the sum of the payments made to fully repay the loan) and the loan proceeds for this loan. Make only two selections, one in each column.
| Repayment amount | Loan proceeds | Expression (in rupees) |
| 0.15n | ||
| 0.80n | ||
| 0.85n | ||
| 1.00n | ||
| 1.15n | ||
| 1.20n |
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Official Answer
Repayment amount : 1.00n
Loan proceeds : 0.85n
17 Feb 2024, 05:27
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Abhivas
Abhivas
Firstly let me admit I am not too fond of the question, and find it a bit surprising to come from OG.
The question talks of discounted interest and loan proceeds, terms that many excl bankers etc may ot be very comfortable with. Although a bit of explanation is given but doesn't seem to be very clear, especially on loan proceeds.
Solution
The discounted interest is cut upfront from the loan amount.
Discount is 15/12 , that is 15% for 12 months, so Discounted interest = 15% of n or 0.15n
Loan proceeds is the amount of loan that has to be paid back. Thus, loan amount is n-0.15n = 0.85n
Next, Repayment amount is the entire amount, so n.
What I can think of an example as?
Say someone has a property worth $1 million dollars.
He can get a loan upto 80% or say he takes a loan of $0.80 million dollars.
The 15% interest of $0.80 million dollars is cut from the loan amount, so what is given as loan is 0.85*$0.80 million dollars
Repayment is this 0.85*$0.80 million dollars plus the interest of 0.15*$0.80 million dollars that was paid initially itself before recieving the balance amount. Total = 0.85*$0.80 million dollars + 0.15*$0.80 million dollars = 1.00 * $0.80 million dollars.
In above, replace $0.80 million dollarsby n.
Some bankers here can throw more light, but I believe this must be the solution.
