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100 points for $49 worth of Veritas practice GMATs FREE VERITAS PRACTICE GMAT EXAMS Earn 10 Points Per Post Earn 10 Points Per Thanks Earn 10 Points Per Upvote ## Interest Rates tagged by: BTGmoderatorRO ##### This topic has 1 expert reply and 0 member replies ## Interest Rates A loan has a variable interest rate that fluctuates between 5% and 9% of the base payment per month. If base payments remain at$250 each month and an additional monthly surcharge of 1% is added to the combined (base + interest), what would be the greatest possible payment due in any given month?
A. $262.50 B.$ 265.13
C. $272.50 D.$ 275.23
E. $286.13 OA is D This question looks unfamiliar, what is the best possible approach to solving this? An Expert is urgently needed. ### GMAT/MBA Expert GMAT Instructor Joined 04 Oct 2017 Posted: 551 messages Followed by: 11 members Upvotes: 180 Quote: A loan has a variable interest rate that fluctuates between 5% and 9% of the base payment per month. If base payments remain at$250 each month and an additional monthly surcharge of 1% is added to the combined (base + interest), what would be the greatest possible payment due in any given month?
A. $262.50 B.$ 265.13
C. $272.50 D.$ 275.23
E. $286.13 OA is D This question looks unfamiliar, what is the best possible approach to solving this? An Expert is urgently needed. Hi Roland2rule, Let's take a look at your question. To find the greatest possible value in the given month, we will be using the greatest interest rate i.e. 9%. Base payment =$250
$$\text{Interest on base payment}\ =\ 250\times9\%$$
$$\text{Interest on base payment}\ =\ 250\times\frac{9}{100}=22.5$$
$$\text{Total payment after 9% interest}=250+22.5=272.5$$

Let's first calculate the amount of additional monthly surcharge on total payment.
$$\text{Additional Monthly surcharge}\ =272.5\times1\%$$
$$\text{Additional Monthly surcharge}\ =272.5\times\frac{1}{100}=2.725$$

$$\text{Greatest possible payment due}\ =272.5+2.725$$
$$\text{Greatest possible payment due}\ =275.225\approx275.23$$

Therefore, Option D is correct.

Hope it helps.
I am available if you'd like any follow up.

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