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

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09 Sep 2013, 01:29

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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

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.

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

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09 Sep 2013, 04:20

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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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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

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

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07 May 2016, 13:01

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.

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

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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...

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

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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

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

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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.