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# Loan X has a principal of $10,000x and a yearly simple inter  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics Author Message Intern Joined: 24 Sep 2011 Posts: 17 Loan X has a principal of$10,000x and a yearly simple inter [#permalink]

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07 Aug 2013, 12:36
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Loan X has a principal of $10,000x and a yearly simple interest rate of 4%. Loan Y has a principal of$10,000y and a yearly simple interest rate of 8%. Loans X and Y will be consolidated to form Loan Z with a principal of $(10,000x + 10,000y) and a yearly simple interest rate of r%, where r = (4x+8y)/(x+y). In the table, select a value for x and a value for y corresponding to a yearly simple interest rate of 5% for the consolidated loan. Make only two selections, one in each column. ..........X..........Y..........Value (A)..............................21 (B)..............................32 (C)..............................51 (D)..............................64 (E)..............................81 (F)..............................96 [Reveal] Spoiler: X=(F), Y=(B) Can someone please explain how to solve this? Intern Joined: 25 Jul 2012 Posts: 11 Concentration: Finance, Entrepreneurship GPA: 3.56 Re: Loan X has a principal of$10,000x and a yearly simple inter [#permalink]

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07 Aug 2013, 14:49
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You have X amount of 4% interest rate and Y amount of 8%. After consolidating these two deposits, the formula to find the new interest rate(r%) of the consolidated amounts is:

r= (4x+8y)/(x+y)

the problem indicates the new interest rate(r%) of the mix is 5%
substituting r with 5,we get:

5=(4x+8y)/(x+y)

5x+5y=4x+8y

x=3y

After you get the above equation, you just need to look at your options for an x that is 3 times of y.
Y=32 X=96

Hope my first post helps.
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Joined: 19 May 2012
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GMAT Date: 03-03-2014
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08 Aug 2013, 11:24
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ksung84 wrote:
Loan X has a principal of $10,000x and a yearly simple interest rate of 4%. Loan Y has a principal of$10,000y and a yearly simple interest rate of 8%. Loans X and Y will be consolidated to form Loan Z with a principal of $(10,000x + 10,000y) and a yearly simple interest rate of r%, where r = (4x+8y)/(x+y). In the table, select a value for x and a value for y corresponding to a yearly simple interest rate of 5% for the consolidated loan. Make only two selections, one in each column. ..........X..........Y..........Value (A)..............................21 (B)..............................32 (C)..............................51 (D)..............................64 (E)..............................81 (F)..............................96 [Reveal] Spoiler: X=(F), Y=(B) Can someone please explain how to solve this? This Integrated Reasoning Two-Part Analysis question can be broken down into a standard weighted-average question. Forgetting the 10,000 constant (which is only there to confuse you), you need to find the weighted average of x (4%) and y (8%) that comes up to 5%. The algebraic solution above is good, but you can also solve this through logic if you preferred. X brings down the average by 1, Y brings up the average by 3. Obviously there need to be more x's than y's, because the weighted average is closer to x. Hence we need 3 x's for every 1 y to end up at the weighted average given. From there, you have to find answer choices that have a 3 to 1 ratio. Since there could be an infinite number of solutions, you know the GMAT will only give you one option among the answer choices that works. In this case 32 and 96. Again you need more x's than y's, so x is 96 and y is 32. Quick takeaway here is that most of the concepts that you study for the GMAT are applied on the IR section as well. There isn't much new content to study (basically just graphics analysis), but sometimes you need to apply familiar concepts in new ways. Hope this helps! -Ron _________________ Senior Manager Joined: 15 Oct 2015 Posts: 376 Concentration: Finance, Strategy GPA: 3.93 WE: Account Management (Education) Re: Loan X has a principal of$10,000x and a yearly simple inter [#permalink]

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18 Dec 2015, 02:37
ozhan wrote:
You have X amount of 4% interest rate and Y amount of 8%. After consolidating these two deposits, the formula to find the new interest rate(r%) of the consolidated amounts is:

r= (4x+8y)/(x+y)

the problem indicates the new interest rate(r%) of the mix is 5%
substituting r with 5,we get:

5=(4x+8y)/(x+y)

5x+5y=4x+8y

x=3y

After you get the above equation, you just need to look at your options for an x that is 3 times of y.
Y=32 X=96

Hope my first post helps.

NOW THAT NAILED IT. BY MERELY LOOKING AT THE QUESTION, WITHOUT SOLVING, YOU MIGHT NOTICE SOMETHING WITH 32 AND 98 AND 4 AND 8. BUT THEN YOU HAD TO SOLVE TO FIND OUT WHICH IS FOR WHICH SIDE.
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Joined: 16 Apr 2015
Posts: 34

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31 Jan 2016, 12:35
Very simple after seeing the answer

I made the mistake to set up the equation as such:

4x+8y / x +y = .05

Can someone explain why you set r = 5 and not r = .05 in this case?
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Re: Loan X has a principal of $10,000x and a yearly simple inter [#permalink] ### Show Tags 04 Feb 2016, 23:32 2 This post received KUDOS Expert's post 1 This post was BOOKMARKED Hi Frank22Times, When deciding on how to represent an interest rate, you have to pay careful attention to what the prompt tells you. If you were trying to calculate a basic interest, then you would almost certainly use a decimal point. For example, 10% on a$200 load is (.10)($200) =$20

In this question though, we're told that a loan has an interest rate of R%. Notice how the % sign is already there - that means we should NOT use a decimal point. When we're told that R = (4x+8y)/(x+y), we're performing the specific calculation that's described in the prompt, so we need to use R=5 (and not R=.05).

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# Special Offer: Save $75 + GMAT Club Tests 60-point improvement guarantee www.empowergmat.com/ ***********************Select EMPOWERgmat Courses now include ALL 6 Official GMAC CATs!*********************** Senior Manager Joined: 17 Jun 2015 Posts: 263 GMAT 1: 540 Q39 V26 GMAT 2: 680 Q46 V37 Re: Loan X has a principal of$10,000x and a yearly simple inter [#permalink]

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26 Sep 2016, 00:27
Weighted averages method is the best way to approach this questions.

W1/W2 = (A2 - Average)/(Average - A1)

This gives the ratio to be 3:1

32 and 96
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