Events & Promotions
| Last visit was: 27 Sep 2026, 00:05 |
It is currently 27 Sep 2026, 00:05 |
|
|
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
Track
Your Progress
Practice
Pays
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Sep 2701:30 AM EDT
-02:30 AM EDT
At one point, she believed GMAT wasn’t for her. After scoring 595, self-doubt crept in and she questioned her potential. But instead of quitting, she made the right strategic changes. The result? A remarkable comeback to 695. Check out how Saakshi did it.
Sep 2807:00 PM EDT
-10:00 PM EDT
Boost your GMAT score in less than one month in a live online class + 6 months access to TTP OnDemand video courses included! Class starts Mon, Tues, Wed, Thur, Fri Sept. 28, 2026 - Oct. 16, 2027, 7:00pm-10:00pm EST
Sep 2911:00 AM EDT
-01:00 PM EDT
" Description: Top scores are possible when you enroll in a powerful GMAT course, taught live online + 6 months access to TTP OnDemand video courses included! Class starts Tues/Thur Sept. 29, 2026 - Dec. 3, 2026, 11:00am-1:00pm EST
Oct 0102:00 AM EDT
-03:00 AM EDT
Tejas studied hard but kept repeating the same mistakes. After 3 attempts at 645, a focused 4-week strategy helped him identify and fix what was holding him back—leading to a 695 with just 12–15 hours of study per week.
Oct 0107:00 AM BST
-08:00 AM GMT
Welcome to the GMAT Club's Free Interview Prep Event for Top MBA Programs! Buy tickets - Virtual series that’s all set to equip you to -excel in your MBA interviews.
Oct 0301:00 PM EDT
-04:00 PM EDT
Top scores are possible when you enroll in a powerful GMAT course, taught live online + 6 months access to TTP OnDemand video courses included! Class starts Saturdays Oct. 3, 2026 - Dec. 26, 2026, 1:00pm-4:00pm EST
mbaaspirant80
Joined: 14 Apr 2017
Last visit: 26 Aug 2020
Posts: 245
Given Kudos: 25
Location: India
sandeep : sharma
Concentration: International Business, Entrepreneurship
Schools: INSEAD Jan '17 IMD Jan'18 CBS '19
GPA: 3.9
Products:
Updated on: 30 Sep 2023, 00:27
Originally posted by mbaaspirant80 on 28 Aug 2017, 08:37.
Last edited by BottomJee on 30 Sep 2023, 00:27, edited 5 times in total.
Last edited by BottomJee on 30 Sep 2023, 00:27, edited 5 times in total.
Moved to new forum
Kudos
Bookmarks
Same total
interest payments: 8.8% $190,000 loan requires
twice the interest: 7.6%
interest payments: 8.8% $190,000 loan requires
twice the interest: 7.6%
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
78% (03:14) correct
22%
(03:25)
wrong
based on 662
sessions
History
Date
Time
Result
Not Attempted Yet
A business needs a $240,000 loan for one year and has two options to decide between. Option 1 is a fixed rate loan for the entire amount, with a simple annual interest rate of 5%. Option 2 involves two loans: a fixed rate loan for $190,000, with a simple annual interest rate of 4%, and a second fixed rate loan for $50,000, with a simple annual interest rate of r%. Both options have otherwise identical terms and require payment in full of interest and principal at the end of the year.
In the first column, identify the interest rate r% at which the two options require the same total interest payment. In the second column, identify the interest rate r% at which the annual interest on the $190,000 loan in Option 2 would be exactly twice the annual interest on the $50,000 loan. Make only two selections, one in each column.
In the first column, identify the interest rate r% at which the two options require the same total interest payment. In the second column, identify the interest rate r% at which the annual interest on the $190,000 loan in Option 2 would be exactly twice the annual interest on the $50,000 loan. Make only two selections, one in each column.
|
Same total interest payments |
$190,000 loan requires twice the interest |
Interest rate r% |
| 4.4% | ||
| 5.2% | ||
| 6.1% | ||
| 7.6% | ||
| 8.8% | ||
| 9.5% |
ShowHide Answer
Official Answer
Same total
interest payments: 8.8% $190,000 loan requires
twice the interest: 7.6%
interest payments: 8.8% $190,000 loan requires
twice the interest: 7.6%
01 Sep 2017, 21:33
Kudos
Bookmarks
i want to know the answer for this question
i got 8.8% for first column and 7.6% for second column
i got 8.8% for first column and 7.6% for second column
04 Feb 2020, 09:02
Kudos
Bookmarks
1)8.8%, since both the options have equal interest so:
240000*5= 190000*4 + 50000*r
r=8.8%
2)190000*4 =2*50000*r, so r=7.6%
Posted from my mobile device
240000*5= 190000*4 + 50000*r
r=8.8%
2)190000*4 =2*50000*r, so r=7.6%
Posted from my mobile device
03 Apr 2021, 09:23
Kudos
Bookmarks
Official Explanation
First, find the interest rate at which the two options have equal total interest payments.
Interest on Loan 1:
5% of $240,000 = 0.05 × $240,000 = $12,000
Alternatively, find 10% and divide by 2 to get 5%: 10% of 240,000 = 24,000. Half of that is 12,000.
Interest on Loan 2:
4% of $190,000 = 0.04 × $190,000 = $7,600
r% of \($50,000=\frac{r}{100}×$50,000=$500r\)
For the total interest payment on Option 1 to be equal to the total interest payment on Option 2, the sum of the interest on the $50,000 loan and the interest on the $190,000 loan must be equal to the interest payment on the $240,000 loan. Set up that equation and solve.
500r + 7,600 = 12,000
500r = 12,000 – 7,600
500r = 4,400
r = 8.8
Next, calculate the interest rate at which the interest payment on the $190,000 loan (at 4%) would be equal to twice the interest payment on the $50,000 loan (at r%). Reuse the numbers already calculated during the first half of this problem.
interest on 190k loan = 2(interest on 50k loan)
7,600 = 2(500r)
7,600 = 1,000r
r = 7.6
Column 1: The correct answer is (E).
Column 2: The correct answer is (D).
First, find the interest rate at which the two options have equal total interest payments.
Interest on Loan 1:
5% of $240,000 = 0.05 × $240,000 = $12,000
Alternatively, find 10% and divide by 2 to get 5%: 10% of 240,000 = 24,000. Half of that is 12,000.
Interest on Loan 2:
4% of $190,000 = 0.04 × $190,000 = $7,600
r% of \($50,000=\frac{r}{100}×$50,000=$500r\)
For the total interest payment on Option 1 to be equal to the total interest payment on Option 2, the sum of the interest on the $50,000 loan and the interest on the $190,000 loan must be equal to the interest payment on the $240,000 loan. Set up that equation and solve.
500r + 7,600 = 12,000
500r = 12,000 – 7,600
500r = 4,400
r = 8.8
Next, calculate the interest rate at which the interest payment on the $190,000 loan (at 4%) would be equal to twice the interest payment on the $50,000 loan (at r%). Reuse the numbers already calculated during the first half of this problem.
interest on 190k loan = 2(interest on 50k loan)
7,600 = 2(500r)
7,600 = 1,000r
r = 7.6
Column 1: The correct answer is (E).
Column 2: The correct answer is (D).
