Last visit was: 11 Sep 2024, 08:50 It is currently 11 Sep 2024, 08:50
Toolkit
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

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.

# Radhika is refinancing a business loan and is considering 2 different

Tags:
Show Tags
Hide Tags
Intern
Joined: 01 Mar 2014
Posts: 5
Own Kudos [?]: 17 [16]
Given Kudos: 12
GMAT Date: 05-23-2014
Manager
Joined: 15 Apr 2016
Posts: 51
Own Kudos [?]: 110 [10]
Given Kudos: 66
General Discussion
Intern
Joined: 06 Sep 2012
Posts: 4
Own Kudos [?]: 64 [2]
Given Kudos: 0
Schools: Stanford '17
Senior Manager
Joined: 15 Jul 2018
Posts: 348
Own Kudos [?]: 478 [1]
Given Kudos: 94
1
Kudos
Option 1: Amount remaining after 1 year = 190000-(12*1250) = 175000

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

Posted from my mobile device
VP
Joined: 18 Dec 2017
Posts: 1157
Own Kudos [?]: 1078 [1]
Given Kudos: 421
Location: United States (KS)
GMAT 1: 600 Q46 V27
1
Kudos
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.
Intern
Joined: 25 Aug 2020
Posts: 10
Own Kudos [?]: 3 [0]
Given Kudos: 120
Hi, one doubt. Why didn't we include refinance fees in the principal as mentioned in the question for Offer2?
Current Student
Joined: 30 Nov 2019
Posts: 46
Own Kudos [?]: 6 [0]
Given Kudos: 27
Location: India
GMAT 1: 750 Q50 V40
GPA: 3.52
WE:Information Technology (Consulting)
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.

Intern
Joined: 09 Jan 2021
Posts: 33
Own Kudos [?]: 12 [0]
Given Kudos: 34
Offer 1: Amount remaining after 1 year = 190000-(12*1250) = 175000

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

Posted from my mobile device
Non-Human User
Joined: 09 Sep 2013
Posts: 34814
Own Kudos [?]: 876 [0]
Given Kudos: 0