NEW HERE? LEARN MORE
closeclose
It is currently 03 Dec 2023, 15:36
Register
GMAT Club Tests
GMAT Club Tests
Decision Tracker
My Rewards
New posts
New comers' posts

Close

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
Your Progress

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

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Go to My Error Log Learn more
Close

Request Expert Reply

Confirm Cancel

Nathan took out a student loan for 1200$ at 10 percent annual interest

14 posts Go to First Unread Post
Print view
NEW TOPIC
POST REPLY
Downloads
My Bookmarks
Reviews
SORT BY:
Date
Kudos
User avatar
RSOHAL
Ryerson (Ted Rogers) Thread Master
Joined: 27 Sep 2015
Posts: 49
Location: Canada
GMAT 1: 410 Q33 V13
WE:Management Consulting (Computer Software)
GMAT ToolKit User
Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  22 Dec 2015, 20:18
37
Bookmarks
00:00
A
B
C
D
E

Difficulty:

45% (medium)

Question Stats:

72% (01:43) correct 28% (01:54) wrong based on 1231 sessions

Hide Show timer Statistics

Nathan took out a student loan for 1200$ at 10 percent annual interest, compounded annually. If he did not repay any of the loan or interest during the first 3 years, which of the following is the closest to the amount of interest he owed for the 3 years.

A. 360
B. 390
C. 400
D. 410
E. 420
ShowHide Answer
Official Answer
Official Answer and Stats are available only to registered users. Register/Login.
Most Helpful Reply
User avatar
D
shashankism
Director
Director
Joined: 13 Mar 2017
Affiliations: IIT Dhanbad
Posts: 636
Location: India
Concentration: General Management, Entrepreneurship
GPA: 3.8
WE:Engineering (Energy and Utilities)
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  12 May 2017, 01:33
4
Kudos
2
Bookmarks
RSOHAL wrote:
Nathan took out a student loan for 1200$ at 10 percent annual interest, compounded annually. If he did not repay any of the loan or interest during the first 3 years, which of the following is the closest to the amount of interest he owed for the 3 years.

A. 360
B. 390
C. 400
D. 410
E. 420


Principal amount is : 1200
Total amount after
1st yr = 1200 x 1.1 = 1320
2nd yr = 1320 x 1,1 = 1452
3rd yr = 1452 x 1.1 = 1597.2

Amount of interest he owed after 3 years = 1597.2 - 1200 = 397.2 ....... The closest value is 400.

Show Spoiler
Correct Answer C
General Discussion
User avatar
L
chetan2u
Math Expert
Joined: 02 Aug 2009
Posts: 10438
Reviews Badge
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  22 Dec 2015, 20:27
3
Kudos
1
Bookmarks
Expert Reply
RSOHAL wrote:
Nathan took out a student loan for 1200$ at 10 percent annual interest, compounded annually. If he did not repay any of the loan or interest during the first 3 years, which of the following is the closest to the amount of interest he owed for the 3 years.

A. 360
B. 390
C. 400
D. 410
E. 420


a straight Qrequiring direct formulae..
when compounded annualy the final amount=P(1+ r/100)^n..
here P=1200, r=10 and n=3..
1200(1+ 10/100)^3..
1200*1.1^3=1597.2


interest =1597-1200=397, which is nearly 400 in the choices given
ansC
_________________
1. Absolute modulus:. 2. Fractions: 3. Percentage increase: 4. Combinations:
Signature Read More
User avatar
B
singhabhijeet
Manager
Manager
Joined: 02 Aug 2013
Posts: 53
Location: India
Concentration: Technology, Leadership
WE:Programming (Consulting)
GMAT ToolKit User
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  12 May 2017, 00:41
1
Kudos
1
Bookmarks
CI = \(1200 * (1+\frac{10}{100})^3\)

= \(1200* (1.10)^3\)

= 1200 * 1.331

= 1597.2


Approx amount = 1597.2 - 1200 = 397.8 = 400 (approx)

Explanation


C.I = P * \((1+\frac{r}{100*n})^nt\)

where,
P = principal amount
r = rate of Interest
n= number of times interest compounded
t = time period.

So, we have

n = 1200
r = 10
n = 1 (compounded annually)
t = 3 years.

Substitute above values in CI formula.


Ans: Option C
User avatar
S
guptarahul
Manager
Manager
Joined: 27 Mar 2017
Status:Gmat lover
Posts: 59
Location: India
Schools: IIMA PGPX"18 IIMA
GMAT 1: 710 Q49 V39
GPA: 3.91
Reviews Badge
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  15 May 2017, 08:35
when compounded annualy the final amount=P(1+ r/100)^n..
here P=1200, r=10 and n=3..
1200(1+ 10/100)^3..
1200*1.1^3=1597.2

final amount - P = P(1+ r/100)^n - P = Compound Interest

1597.2-1200 = :) aprox (397)= :-D aprox (400)
User avatar
B
ab52
Intern
Intern
Joined: 14 Dec 2016
Posts: 6
Location: India
Schools: Booth '18 Stern '18 Rotman '21 Erasmus '20
GMAT 1: 680 Q48 V35
GPA: 4
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  26 May 2017, 03:26
3
Kudos
1
Bookmarks
RSOHAL wrote:
Nathan took out a student loan for 1200$ at 10 percent annual interest, compounded annually. If he did not repay any of the loan or interest during the first 3 years, which of the following is the closest to the amount of interest he owed for the 3 years.

A. 360
B. 390
C. 400
D. 410
E. 420


I did it this way:
1st year's interest: 10% of 1200=120,
2nd year's interest: 10% of 1320=132, ( here, 1320= 1200 +120),
3rd year's interest: 10% of 1452= 145.2 ( 1452= 1320+132)
hence total interest= \(397.2\approx{400}\)
avatar
B
StockAnalyst
Intern
Intern
Joined: 17 Jul 2017
Posts: 8
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  22 Jul 2017, 05:54
1
Kudos
Question asked approximation so it is easy
Initial amount 1200 mean at year 1 end==120$(interest)
Now amount 1320 mean at year 2 end==(120+132)
now amount 1452 mean at year 3 end==(120+132+145.2)
total=397.2 close to 400
Option C
avatar
S
Alphatango
Intern
Intern
Joined: 01 Feb 2015
Status:One more try
Posts: 24
Location: India
Concentration: General Management, Economics
Schools: Duke '19 ISB '18 Tepper '19
WE:Corporate Finance (Commercial Banking)
GMAT ToolKit User
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  12 Aug 2017, 07:22
RSOHAL wrote:
Nathan took out a student loan for 1200$ at 10 percent annual interest, compounded annually. If he did not repay any of the loan or interest during the first 3 years, which of the following is the closest to the amount of interest he owed for the 3 years.

A. 360
B. 390
C. 400
D. 410
E. 420


Closer to 400 than 390.
I doubt whether these qstns do come in exam.
User avatar
S
Blackishmamba
Intern
Intern
Joined: 02 Aug 2017
Posts: 37
Concentration: Strategy, Nonprofit
Schools: ISB '20
GPA: 3.71
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  08 Aug 2018, 21:21
RSOHAL wrote:
Nathan took out a student loan for 1200$ at 10 percent annual interest, compounded annually. If he did not repay any of the loan or interest during the first 3 years, which of the following is the closest to the amount of interest he owed for the 3 years.

A. 360
B. 390
C. 400
D. 410
E. 420


Please find the short calculation

Posted from my mobile device
Attachments

1533792018390970729514982243845.jpg
1533792018390970729514982243845.jpg [ 2.15 MiB | Viewed 12849 times ]

User avatar
D
GMATGuruNY
Tutor
Joined: 04 Aug 2010
Posts: 1268
Schools:Dartmouth College
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  22 Feb 2019, 11:36
Expert Reply
RSOHAL wrote:
Nathan took out a student loan for 1200$ at 10 percent annual interest, compounded annually. If he did not repay any of the loan or interest during the first 3 years, which of the following is the closest to the amount of interest he owed for the 3 years.

A. 360
B. 390
C. 400
D. 410
E. 420


Since the 10% rate is compounded annually, the amount of interest increases by 10% each year:
First-year interest = 10% of 1200 = 120.
Second-year interest = (first-year interest) + 10% = 120 + 12 = 132.
Third-year interest = (second-year interest) + 10% = 132 + 13.2 = 145.2.
Total interest = 120 + 132 + 145.2 = 397.2.

Show Spoiler
C

_________________
GMAT and GRE Tutor for over 20 years
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs
Available for live sessions in NYC and remotely all over the world
For more information, please email me at GMATGuruNY at gmail
Signature Read More
User avatar
L
ScottTargetTestPrep
Target Test Prep Representative
Joined: 14 Oct 2015
Status:Founder & CEO
Affiliations: Target Test Prep
Posts: 18342
Location: United States (CA)
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  24 Feb 2019, 05:53
1
Bookmarks
Expert Reply
RSOHAL wrote:
Nathan took out a student loan for 1200$ at 10 percent annual interest, compounded annually. If he did not repay any of the loan or interest during the first 3 years, which of the following is the closest to the amount of interest he owed for the 3 years.

A. 360
B. 390
C. 400
D. 410
E. 420


We can use the annual compound interest formula: A = P(1 + r)^t. So we have:

A = 1200(1 + 0.1)^3

A = 1200(1.1)^3

A = 1597.2

The amount of $1597.20 is the total amount (principal plus interest) he owes, so the amount of interest he owes is 1597.2 - 1200 = $397.2, or approximately $400.

Answer: C
_________________
See why Target Test Prep is the top rated GMAT course on GMAT Club. Read Our Reviews
Signature Read More
User avatar
S
SchruteDwight
Manager
Manager
Joined: 03 Sep 2018
Posts: 183
Location: Netherlands
Schools: HEC MiM "22 (S) LBS MiM "21 (A)
GPA: 4
Reviews Badge
Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  26 Oct 2019, 04:18
\(1200*(1+\frac{1}{10})^3-1200 \implies 1200(1+\frac{2}{10}+\frac{1}{100})(1+\frac{1}{10})-1200 \implies 120+240+24+12+1.2\)
_________________
Good luck to you. Retired from this forum.
Signature Read More
User avatar
D
Hoozan
Director
Director
Joined: 28 Sep 2018
Posts: 743
GMAT 1: 660 Q48 V33 (Online)
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  05 Apr 2022, 21:25
For those who do not want to learn any formula can just use the basic understanding of SI and CI and solve

10% of 1200 = 120 (1) ; New amount = 1320.

10% of 1320 = 132 (2) ; New amount = 1450

10% of 1450 = 145 (3)

Add (1) (2) & (3)

Total interest due = $397

(C)
User avatar
bumpbot
Non-Human User
Joined: 09 Sep 2013
Posts: 30768
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink] New post  26 May 2023, 05:56
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.
_________________
GMAT Books | GMAT Club Tests | Best Prices on GMAT Courses | GMAT Mobile App | Math Resources | Verbal Resources
Signature Read More
GMAT Club Bot
gmatclubot
Re: Nathan took out a student loan for 1200$ at 10 percent annual interest [#permalink]
26 May 2023, 05:56
NEW TOPIC
POST REPLY
Downloads
My Bookmarks
Reviews
Moderators:
Bunuel
Math Expert
90065 posts
yashikaaggarwal
Senior Moderator - Masters Forum
3141 posts

cron

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne
Main navigation
GMAT Resources
Partners
MBA Resources
www.gmac.com|www.mba.com | | GMAT Club Rules | Terms and Conditions