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Radhika is refinancing a business loan and is considering 2 different

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amirsalehi
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Radhika is refinancing a business loan and is considering 2 different [#permalink] New post  Updated on: 25 Oct 2019, 03:52
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Project IR Butler 2019-20 - Get one IR Question Everyday
Question # 24, Date : 24-Oct-2019
This post is a part of Project IR Butler 2019-20. Click here for Details


Radhika is refinancing a business loan and is considering 2 different loan offers. Under Offer 1, the loan’s initial principal would be $190,000, and she would pay down $1,250 in principal with each monthly payment during the first year of the loan. Under Offer 2, $4,000 in refinancing fees would be added to bring the principal to $194,000, but she would pay down $1,775 in principal with each monthly payment during the first year of the loan.

In the first column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 1. In the second column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 2. Make only two selections, one in each column.
Attachment:
Tab.jpg
Tab.jpg [ 25.57 KiB | Viewed 15611 times ]


Show SpoilerOA
Payment remaining after 12 months under offer 1: 175,000
Payment remaining after 12 months under offer 2: 172,700

Originally posted by amirsalehi on 23 Aug 2014, 11:09.
Last edited by Sajjad1994 on 25 Oct 2019, 03:52, edited 3 times in total.
Updated - Complete topic (150).
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Shrivathsan
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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink] New post  27 Jun 2016, 21:05
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wadbarzain wrote:
Radhika is refinancing a business loan and is considering 2 different loan offers. Under Offer 1, the loan's initial principal would be $190,000, and she would pay down $1,250 in principal with each monthly payment during the first year of the loan. Under Offer 2, $4,000 in refinancing fees would be added to bring the principal to $194,000, but she would pay down $1,775 in principal with each monthly payment during the first year.

In the first column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 1. In the second column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 2. Make only two selections, one in each column.

$168,700
$171,000
$172,700
$175,000
$176,700
$179,000


Show Spoiler
Offer 1: $175,000 Offer 2: $172,700



Pretty simple Q.
Offer 1 :
P=1250 ; months : 12 ; amount to repay : 190000
amount remain after 12 months.
190000-(12*1250) = 175000

Offer 2 :
P=1775; months : 12 ; amount to repay : 194000
amount remain after 12 months.
194000-(12*1775) = 172700

--------------------------------
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marciful
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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink] New post  24 Aug 2014, 09:53
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amirsalehi wrote:
Hi there,
Can anyone help me with this IR question?


Offer 1 Offer 2
190,000 Principal 194,000
1,250 Monthly Principal Payments 1,775
15,000 Total Principal Payments after Year 1 21,300
175,000 Principal remaining after Year 1 172,700
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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink] New post  19 Oct 2019, 09:41
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Option 1: Amount remaining after 1 year = 190000-(12*1250) = 175000

Option 2:Amount remaining after 1 year = 194000-(12*1775) = 172700

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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink] New post  19 Oct 2019, 16:38
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Quote:
Radhika is refinancing a business loan and is considering 2 different loan offers. Under Offer 1, the loan's initial principal would be $190,000, and she would pay down $1,250 in principal with each monthly payment during the first year of the loan. Under Offer 2, $4,000 in refinancing fees would be added to bring the principal to $194,000, but she would pay down $1,775 in principal with each monthly payment during the first year.

In the first column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 1. In the second column of the table, select the amount of principal that would remain after 12 monthly payments under Offer 2. Make only two selections, one in each column.

A. $168,700
B. $171,000
C. $172,700
D. $175,000
E. $176,700
F. $179,000


Offer 1 :
Principal Amount = 1,90,000
Per Month = 1250
12 Months = 12*1250=12500+2500=15000
Balance = 190000-15000 = 175000

Offer 2 :
Principal Amount = 1,94,000
Per Month = 1775
12 Months = 12*1775=17750+3550=21,300
Balance = 194000-21300 = 1,72,700

So Option D and option C.
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ishitaz
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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink] New post  08 Nov 2020, 04:14
Hi, one doubt. Why didn't we include refinance fees in the principal as mentioned in the question for Offer2?
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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink] New post  10 Nov 2020, 12:46
ishitaz wrote:
Hi, one doubt. Why didn't we include refinance fees in the principal as mentioned in the question for Offer2?

ishitaz - The refinance fees is already added in the principal in Offer 2. The principal amount of $194,000 in Offer 2 is inclusive of the $4000 refinancing fees. The questions says -
Quote:
....Under Offer 2, $4,000 in refinancing fees would be added to bring the principal to $194,000, but she would....

This means that the $4000 refinancing fees when added to the principal, brings the total value of principal to $194,000.

Hope that clears your doubt.
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scranjith
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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink] New post  04 Mar 2021, 09:03
Offer 1: Amount remaining after 1 year = 190000-(12*1250) = 175000

Offer 2: Amount remaining after 1 year = 194000-4000-(12*1775) = 168700

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Re: Radhika is refinancing a business loan and is considering 2 different [#permalink]
04 Mar 2021, 09:03
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