BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem
TTP OnDemand GMAT Video Course
Featured Course

Target Test Prep GMAT OnDemand

Scott Woodbury-Stewart’s private virtual classroom — 400 hours of master-class video lessons for the GMAT Focus Edition.

  • 715+ score guarantee — highest in the industry (99th percentile)
  • 52 chapters · 1,500+ lessons · 4,000+ practice questions
  • 400 hours of video · 1,500+ instructor-led HD smartboard lessons
  • 300,000+ students accepted to Harvard, Stanford, Wharton, Booth & Sloan & more
  • 24/7 live support + weekly Zoom office hours with GMAT instructors
  • TTP AI Assist — 24/7 AI-powered virtual tutor for instant help
  • 1,200+ flashcards + AI-powered study assistant & daily calendar
  • OnDemand, LiveTeach & GMAT Bootcamp formats available
  • Also: GRE, SAT Math & Executive Assessment courses
  • MBA Admissions Consulting now available
  • 🏆 2025 EdTech Breakthrough Award: Test Prep Solution Provider of the Year
  • 200,000+ students served
  • 5-day free trial — $0 to start, no auto-billing, cancel anytime
★★★★★ 5.0 (559 reviews)
130-pt guarantee
$0 to start then $127/mo
Start Free 5-Day Trial Read 559 Reviews →

CI Question

Expert replies
Post new topic Post Reply
Previous Topic Next Topic
Senior | Next Rank: 100 Posts
Posts: 83
Joined: Sat Feb 26, 2011 11:22 amFollowed by: 1 member
Thanked: 1 times
by MI3 » Sun Jun 19, 2011 7:05 am
Louie takes out a three-month loan of $1000. The lender charges him 10% interest per month compounded
monthly. The terms of the loan state that Louie must repay the loan in three equal monthly payments. To the nearest dollar, how much does Louie have to pay each month?
A. 333
B. 383
C. 402
D. 433
E. 483

Unfortunately, I don't know the answer to this problem. Experts please advise IMO answer should be A
Top
Join the discussion
Log in to postLogin with Googleuse password
QUOTE IN REPLY
Source: — Problem Solving |
Legendary Member
Posts: 1448
Joined: Tue May 17, 2011 9:55 amFollowed by: 53 members
Location: India
Thanked: 375 times

by Frankenstein » Sun Jun 19, 2011 7:19 am
Hi,
1st month: Amount = 1000(1+0.1) = 1100
He pays x. So, the balance after 1st month is 1100-x
2nd month: Amount = (1100-x)(1.1)
He pays x. So, the balance after 1st month is (1100-x)1.1 -x
3rd month: Amount = [(1100-x)1.1 -x](1.1)
He pays x and balance should be zero.
So, [(1100-x)1.1 -x](1.1) = x => 1331 = 3.31x
So, x = 402.1


Another Method:
If the installment value is x after 1 month, then it contributes to x/1.1 to the current value
Similarly, installment value is x after 2 month, then it contributes to x/(1.1)^2 to the current value
Similarly, installment value is x after 1 month, then it contributes to x/(1.1)^3 to the current value
So, total current value = x/1.1 + x/(1.1)^2 + x/(1.1)^3 = 1000
Solving, we get x = 402.

Hence, C
Cheers!

Things are not what they appear to be... nor are they otherwise
Top
Join the discussion
Log in to postLogin with Googleuse password
QUOTE IN REPLY
User avatar
GMAT Instructor
Posts: 15539
Joined: Tue May 25, 2010 12:04 pmFollowed by: 1906 members
Location: New York, NY
Thanked: 13060 times
GMAT Score:790

by GMATGuruNY » Sun Jun 19, 2011 11:23 am
MI3 wrote:Louie takes out a three-month loan of $1000. The lender charges him 10% interest per month compounded
monthly. The terms of the loan state that Louie must repay the loan in three equal monthly payments. To the nearest dollar, how much does Louie have to pay each month?
A. 333
B. 383
C. 402
D. 433
E. 483

Unfortunately, I don't know the answer to this problem. Experts please advise IMO answer should be A
We can plug in the answers, which represent the amount paid each month.

Answer choice C: 402 ≈ 400.
Interest charged for first month = .1(1000) = 100.
Total after payment = 1000+100-400 = 700.
Interest charged second month = .1*700 = 70.
Total after payment = 700+70-400 = 370.
Interest charged third month = .1*370 = 37.
Total after payment = 370+37-400 = 7.
Since $7 is left, the monthly payment must be just a bit more than 400; thus, answer choice C is correct.

The correct answer is C.
Private tutor exclusively for the GMAT and GRE, with over 20 years of experience.
Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.

As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.

For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
Student Review #2
Student Review #3
Top
Join the discussion
Log in to postLogin with Googleuse password
QUOTE IN REPLY
User avatar
Master | Next Rank: 500 Posts
Posts: 143
Joined: Sat Nov 06, 2010 9:06 pmFollowed by: 1 member
Thanked: 10 times

by edvhou812 » Sun Jun 19, 2011 5:30 pm
You need to remember that interest is charged. Also need to remember that the interest is compounded monthly.

First month: 1000*1.1 = 1,100. 1,100/3 = About $366
Second month: 1100-366 = 734; 734*1.1 = About 807; 807/2 = about $403
Third month. 807-403 = 404; 404*1.1 = About 444 (Final payment)

366+403+444= $1213. 1213/3 = About 404. We did a bit of rounding above, so the answer must be 402. Answer: C
Top
Join the discussion
Log in to postLogin with Googleuse password
QUOTE IN REPLY
Legendary Member
Posts: 1448
Joined: Tue May 17, 2011 9:55 amFollowed by: 53 members
Location: India
Thanked: 375 times

by Frankenstein » Sun Jun 19, 2011 8:41 pm
edvhou812 wrote:You need to remember that interest is charged. Also need to remember that the interest is compounded monthly.

First month: 1000*1.1 = 1,100. 1,100/3 = About $366
Second month: 1100-366 = 734; 734*1.1 = About 807; 807/2 = about $403
Third month. 807-403 = 404; 404*1.1 = About 444 (Final payment)

366+403+444= $1213. 1213/3 = About 404. We did a bit of rounding above, so the answer must be 402. Answer: C
Hi,
This is simply not correct. If you had any other option which is closer to 404, you would have chosen that?
Cheers!

Things are not what they appear to be... nor are they otherwise
Top
Join the discussion
Log in to postLogin with Googleuse password
QUOTE IN REPLY
User avatar
Master | Next Rank: 500 Posts
Posts: 461
Joined: Tue May 10, 2011 9:09 amFollowed by: 3 members
Location: pune
Thanked: 36 times

by amit2k9 » Sun Jun 19, 2011 10:05 pm
hmm liked the first method here.
For Understanding Sustainability,Green Businesses and Social Entrepreneurship visit -https://aamthoughts.blocked/
(Featured Best Green Site Worldwide-https://bloggers.com/green/popular/page2)
Top
Join the discussion
Log in to postLogin with Googleuse password
QUOTE IN REPLY
Post new topic Post Reply
• Page 1 of 1