Interest Payment

Expert replies

jk2010: Senior | Next Rank: 100 Posts; Posts: 66; Joined: Wed Sep 29, 2010 8:41 am; Location: Washhington, DC; Thanked: 8 times

by jk2010 » Sat Mar 05, 2011 11:22 am

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

Like this post

Source: Beat The GMAT — Problem Solving | Sat Mar 05, 2011 11:22 am

jk2010: Senior | Next Rank: 100 Posts; Posts: 66; Joined: Wed Sep 29, 2010 8:41 am; Location: Washhington, DC; Thanked: 8 times

by jk2010 » Sat Mar 05, 2011 11:25 am

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.

Like this post

Night reader: Legendary Member; Posts: 1337; Joined: Sat Dec 27, 2008 6:29 pmFollowed by: 10 members; Thanked: 127 times

by Night reader » Sat Mar 05, 2011 1:08 pm

@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

My knowledge frontiers came to evolve the GMATPill's methods - the credited study means to boost the Verbal competence. I really like their videos, especially for RC, CR and SC. You do check their study methods at https://www.gmatpill.com

Like this post

vineeshp: Legendary Member; Posts: 965; Joined: Thu Jan 28, 2010 12:52 amFollowed by: 34 members; Thanked: 156 times; GMAT Score:720

by vineeshp » Sat Mar 05, 2011 9:52 pm

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.

Vineesh,
Just telling you what I know and think. I am not the expert.

Like this post

Post new topic Post Reply

• Page 1 of 1

GMAT Course Reviews

559 reviews

1168 reviews

431 reviews

359 reviews

147 reviews

5/5

5 Star (560 Reviews)

"Target Test Prep is the closest to the official version of the GMAT exam, about 99% accuracy in terms of the quality and quantity of information. The course has excellently created singular sets of focused lessons and tests for every possible topic that one could come across in the official GMAT exam."

"The TTP course maximizes the efficiency of the time you spend studying. It will take time and effort but I could almost guarantee that if you complete the course exactly as it is laid out you will get an amazing score. They also have a very responsive team willing to help with any questions you might have."

"TTP has two things that I think no other test prep company offers: A teaching approach that reinforces understanding and an attitude that will give you the mental preparedness needed to succeed on the test. TTP gives you a deep understanding of the concept you need to know while teaching you how to think."

Write a Review