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Ryerson (Ted Rogers) Thread Master
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Nathan took out a student loan for 1200$ at 10 percent annual interest
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22 Dec 2015, 21:18
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66% (01:42) correct 34% (01:50) wrong based on 410 sessions
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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
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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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22 Dec 2015, 21:27
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 =15971200=397, which is nearly 400 in the choices given ansC
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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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12 May 2017, 01:41
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



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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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12 May 2017, 02:33
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.
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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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15 May 2017, 09:35
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=1597.2final amount  P = P(1+ r/100)^n  P = Compound Interest 1597.21200 = aprox (397)= aprox (400)
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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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26 May 2017, 04:26
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= \(397.2\approx{400}\)



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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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22 Jul 2017, 06:54
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



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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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12 Aug 2017, 08:22
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.
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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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08 Aug 2018, 22:21
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
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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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22 Feb 2019, 12:36
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: Firstyear interest = 10% of 1200 = 120. Secondyear interest = (firstyear interest) + 10% = 120 + 12 = 132. Thirdyear interest = (secondyear interest) + 10% = 132 + 13.2 = 145.2. Total interest = 120 + 132 + 145.2 = 397.2.
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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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24 Feb 2019, 06:53
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 $400. Answer: C
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Re: Nathan took out a student loan for 1200$ at 10 percent annual interest
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