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

 It is currently 14 Oct 2019, 23:39

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

Jim needs \$1,000 to buy a new flat-screen TV. Since he has

Author Message
Intern
Joined: 09 Sep 2013
Posts: 4
Jim needs \$1,000 to buy a new flat-screen TV. Since he has  [#permalink]

Show Tags

Updated on: 09 Sep 2013, 03:11
7
00:00

Difficulty:

(N/A)

Question Stats:

92% (02:48) correct 8% (02:07) wrong based on 389 sessions

HideShow timer Statistics

Jim needs \$1,000 to buy a new flat-screen TV. Since he has only \$7, he borrows the remaining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)^N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?

A. \$357.67
B. \$375.85
C. \$387.40
D. \$399.30
E. \$433.33

Any idea how to solve this ?

--== Message from the GMAT Club Team ==--

THERE IS LIKELY A BETTER DISCUSSION OF THIS EXACT QUESTION.
This discussion does not meet community quality standards. It has been retired.

If you would like to discuss this question please re-post it in the respective forum. Thank you!

To review the GMAT Club's Forums Posting Guidelines, please follow these links: Quantitative | Verbal Please note - we may remove posts that do not follow our posting guidelines. Thank you.

Originally posted by BugDGmat on 09 Sep 2013, 02:29.
Last edited by Bunuel on 09 Sep 2013, 03:11, edited 1 time in total.
Renamed the topic, edited the question and moved to PS forum.
Manager
Joined: 23 May 2013
Posts: 93
Re: Jim needs \$1,000 to buy a new flat-screen TV. Since he has  [#permalink]

Show Tags

09 Sep 2013, 05:20
1
BugDGmat wrote:
Jim needs \$1,000 to buy a new flat-screen TV. Since he has only \$7, he borrows the remaining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)^N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?

A. \$357.67
B. \$375.85
C. \$387.40
D. \$399.30
E. \$433.33

Any idea how to solve this ?

L = 993
r = 0.1
C = 1.1^3 = 1.331
Insert all of these in the formula and we get
P = 993*1.331*0.1/0.331

In order to resolve above without a calc, we need to find the approx value of 0.1331/0.331 ~ 0.4~
~ 993*0.4
~ 397

Answer D should be the one.
_________________
“Confidence comes not from always being right but from not fearing to be wrong.”
Math Expert
Joined: 02 Sep 2009
Posts: 58335
Re: Jim needs \$1,000 to buy a new flat-screen TV. Since he has  [#permalink]

Show Tags

10 Sep 2013, 01:22
BugDGmat wrote:
Jim needs \$1,000 to buy a new flat-screen TV. Since he has only \$7, he borrows the remaining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)^N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?

A. \$357.67
B. \$375.85
C. \$387.40
D. \$399.30
E. \$433.33

Any idea how to solve this ?

Similar question to practice: louie-takes-out-a-three-month-loan-of-1000-the-lender-101506.html
_________________
Intern
Joined: 02 Jan 2016
Posts: 2
Location: United States
Concentration: Finance, General Management
GPA: 3.81
WE: Information Technology (Computer Software)
Re: Jim needs \$1,000 to buy a new flat-screen TV. Since he has  [#permalink]

Show Tags

07 May 2016, 14:01
1
1
BugDGmat wrote:
Jim needs \$1,000 to buy a new flat-screen TV. Since he has only \$7, he borrows the remaining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)^N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?

A. \$357.67
B. \$375.85
C. \$387.40
D. \$399.30
E. \$433.33

Any idea how to solve this ?

EMI can be calculated by the formula

EMI = (P* R) /[1 - (100/100+R)^n]

Where P is principal, R is interest, n is number of installments.

In this case,

EMI = (993 *10/100)/[1-(10000/11000)^3] = (99.30)/[1 - (1000/1331)] =99.30/331/1331 = 1331*0.3 = 399.30

Intern
Joined: 03 Jun 2017
Posts: 10
Re: Jim needs \$1,000 to buy a new flat-screen TV. Since he has  [#permalink]

Show Tags

25 Jun 2017, 09:24
Hi Bunuel
here, should we take C=(1+r)^2.... or ^3??
In the link a similar problem for 3 months, we did not consider the interest for the last month...
Intern
Joined: 03 Jun 2017
Posts: 10
Re: Jim needs \$1,000 to buy a new flat-screen TV. Since he has  [#permalink]

Show Tags

25 Jun 2017, 09:29
As per Ganesh raja
we can use the formula, but why have they given in the question as to what formula to be used to calculate the same?
Manager
Joined: 27 Aug 2014
Posts: 70
Re: Jim needs \$1,000 to buy a new flat-screen TV. Since he has  [#permalink]

Show Tags

04 Oct 2017, 01:38
Bunuel wrote:
BugDGmat wrote:
Jim needs \$1,000 to buy a new flat-screen TV. Since he has only \$7, he borrows the remaining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)^N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?

A. \$357.67
B. \$375.85
C. \$387.40
D. \$399.30
E. \$433.33

Any idea how to solve this ?

Hi Bunuel
I think there is an error in the question. The formula gives monthly payment but question asks for annual payment. Pls explain.

Similar question to practice: http://gmatclub.com/forum/louie-takes-o ... 01506.html

--== Message from the GMAT Club Team ==--

THERE IS LIKELY A BETTER DISCUSSION OF THIS EXACT QUESTION.
This discussion does not meet community quality standards. It has been retired.

If you would like to discuss this question please re-post it in the respective forum. Thank you!

To review the GMAT Club's Forums Posting Guidelines, please follow these links: Quantitative | Verbal Please note - we may remove posts that do not follow our posting guidelines. Thank you.
Non-Human User
Joined: 09 Sep 2013
Posts: 13146
Re: Jim needs \$1,000 to buy a new flat-screen TV. Since he has  [#permalink]

Show Tags

21 Oct 2018, 17:51
Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________
Re: Jim needs \$1,000 to buy a new flat-screen TV. Since he has   [#permalink] 21 Oct 2018, 17:51
Display posts from previous: Sort by