A loan of $10,000 has an annual interest rate of 8%, compounded quarterly. What will be the total due (principal + inter

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VJesus12: Legendary Member; Posts: 2276; Joined: Sat Oct 14, 2017 6:10 amFollowed by: 3 members

by VJesus12 » Sat May 30, 2020 3:13 pm

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A loan of $10,000 has an annual interest rate of 8%, compounded quarterly. What will be the total due (principal + interest) if no payment is made for 12 months?

(A) $800
(B) $824
(C) $10,800
(D) $10,824
(E) $11,600

[spoiler]OA=D[/spoiler]

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Source: Beat The GMAT — Problem Solving | Sat May 30, 2020 3:13 pm

orthodoxparadox: Junior | Next Rank: 30 Posts; Posts: 15; Joined: Sat May 30, 2020 10:48 pm

Re: A loan of $10,000 has an annual interest rate of 8%, compounded quarterly. What will be the total due (principal + i

by orthodoxparadox » Sat May 30, 2020 11:59 pm

Since, annual interest is $8\%$ , interest per quarter is $2\%$

Number of payment periods = Number of quarters in 12 months = 4

Amount due = $$P\ \cdot\ \left(1.02\right)^4\ =\ 10000\ \cdot\ \left(1.0824\right)\ =\ 10824$$ D

jenniferdehner9: Newbie | Next Rank: 10 Posts; Posts: 1; Joined: Mon Jan 10, 2022 3:53 am

Re: A loan of $10,000 has an annual interest rate of 8%, compounded quarterly. What will be the total due (principal + i

by jenniferdehner9 » Mon Jan 10, 2022 3:56 am

Thanks for this information.

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