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

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Jim needs $1,000 to buy a new flat-screen TV. Since he has  [#permalink]

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New post Updated on: 09 Sep 2013, 02:11
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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 ?
I don't know the answer :(

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Originally posted by BugDGmat on 09 Sep 2013, 01:29.
Last edited by Bunuel on 09 Sep 2013, 02:11, edited 1 time in total.
Renamed the topic, edited the question and moved to PS forum.
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has  [#permalink]

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New post 09 Sep 2013, 04:20
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 ?
I don't know the answer :(


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.
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has  [#permalink]

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New post 10 Sep 2013, 00:22
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 ?
I don't know the answer :(


Similar question to practice: louie-takes-out-a-three-month-loan-of-1000-the-lender-101506.html
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has  [#permalink]

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New post 07 May 2016, 13:01
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 ?
I don't know the answer :(



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

Hence answer is D
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has  [#permalink]

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New post 25 Jun 2017, 08:24
Hi Bunuel
pls give in your inputs
here, should we take C=(1+r)^2.... or ^3??
Thanks in advance...
In the link a similar problem for 3 months, we did not consider the interest for the last month...
how about this one... Confused... Pls throw some light...
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has  [#permalink]

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New post 25 Jun 2017, 08:29
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?
Kindly reply to clarify
THanks in advance
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Posts: 75
Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has  [#permalink]

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New post 04 Oct 2017, 00:38
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 ?
I don't know the answer :(


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


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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.
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has  [#permalink]

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New post 21 Oct 2018, 16:51
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Re: Jim needs $1,000 to buy a new flat-screen TV. Since he has &nbs [#permalink] 21 Oct 2018, 16:51
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