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Math Help - Help understanding the methodoolgy for these maths questions?

  1. #1
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    Help understanding the methodoolgy for these maths questions?

    I was informed maths books do have errors in, which is crazy because it defeats the whole object of testing yourself from a book if it gives incorrect answers



    Q: A gym subscription is either 500 per year, or 50 per month over twelve months. It would be cheaper to borrow 500 from a bank for twelve months at an APR of 20% and pay the gym in full rather than to pay monthly.

    TRUE / FALSE / CANNOT SAY

    So i calculate 500 borrowed at 20% APR = 600. 50 per month for year = 600. So the answer is FALSE.

    But no, the answer is:

    A: True (the total payable on a 500 loan at an APR OF 20% would be 550 as the interest is constantly reducing as the loan is repaid. Paying 50 pound for twelve months totals 600 and so is more expensive).


    - the question says nothing about the loan being repaid so how am i supposed to know or even guess this.
    Last edited by mr fantastic; October 23rd 2011 at 05:39 PM.
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  2. #2
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    Re: Help understanding the methodoolgy for these maths questions?

    You are right that there is not enough in the question to deduce how frequently the loan repayments would be (your calculation is corect for a single repayment at the end of the year).

    Whether or not you would expect to be told this depends on your type and level of study. If, on your course, all loans are repayed monthly then the question would not necessary tell you this every time.
    Last edited by SpringFan25; October 23rd 2011 at 08:57 AM.
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  3. #3
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    Re: Help understanding the methodoolgy for these maths questions?

    Thank you,

    guess this is error number 3 so far in this book,

    by the way im practising for a numerical accountancy test not school
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