GMAT Quantitative Reasoning Practice Test 2

Question : 61 of 100

Marks: +1, -0

Mr. Rusty owes the bank

1,040,000, he returns

40,000 quarterly to the bank. If the tax on the money Rusty owes is compounded quarterly by 0.25% starting before Rusty paid the first payment, how months would it take poor Rusty to reach a point where he owes the bank no more than 1 million dollars?

Validate

Solution:

Every three months Rusty gives the bank

\$ 40,000

.
After the first quarter the bank took

0.0025 × 1040000=2600

and Rusty paid

\$ 40,000

so the new
Debt is now

1,040,000-40,000+2,600=1,002,600

).
After the second quarter the bank took

0.0025 × 1002600=2506.5

and Rusty paid again

\$ 40,000

so the new Debt is now

1,002,600-40,000+2506.5< 1

million dollars.

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