The problem I have with this is that the answer neglects to address the principal. I worked this out to solve for 6480/12 = 540, which of course is not an answer. Perhaps I am jaded by looking for tricks.

@jk, they want Joelle to pay only interest --> $6,000*8% in monthly installments = $40, though there's a room for us to assume the principal amount ($500) too, GMAT

jk2010 wrote:I think this is a deceptive (at least poorly written) question from 800 Score.

Joelle lent $6000 to a friend who was opening up a coffee shop. The friend agreed to pay 8% interest on the loan annually, payable in equal monthly installments. What was the value of each installment payment that Joelle received?

A) $40
B) $120
C) $240
D) $400
E) $480

Answer
A

I agree and disagree.
"The friend agreed to pay 8% interest on the loan annually, payable in equal monthly installments. " This statement is supposed to make us assume that he only pays interest. But it should really be more expicit about what happens to the interest. I don't think GMAT would have left that out. They always give explicit information about assumptions to make.