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A $240 interest-free loan is to be paid back in equal monthly payments. If a total of...

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A $240 interest-free loan is to be paid back in equal monthly payments. If a total of...

by BTGmoderatorLU » Sat May 30, 2020 1:34 am

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Source: Princeton Review

A $240 interest-free loan is to be paid back in equal monthly payments. If a total of 2.5% of the original amount of loan is paid back semi-annually, how many months will it take to pay back $21.00?

A. 6
B. 7
C. 18
D. 21
E. 24

The OA is D
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Re: A $240 interest-free loan is to be paid back in equal monthly payments. If a total of...

by i256 » Sat May 30, 2020 5:34 am
If 2.5% of total amount is paid back semi-annually, let's calculate the amount to be paid:

\frac{2.5}{100}x240
= $6

So, if $6 is semi-annually (6 months) --> $1 is paid per month (\frac{\text{6}}{6})

Number of months for $21 --> $21 (total to be paid) / $1 (paid per month) = 21 months
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Re: A $240 interest-free loan is to be paid back in equal monthly payments. If a total of...

by ezmodest » Sat May 30, 2020 9:23 am
My solution:
If 2.5% is being paid back semi annually then we can find the amount using the following:

10% of $240 = $24
$24*2.5 = $60
$60/10 = $6 (equivalent to 2.5%) per 6 months
This is equivalent to $1 per month

Therefore we pay $21 in 21 months
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