Logical Reasoning

PT129 · S2 · Q3 MetroBank made loans to ten

A free, expert breakdown of this official LSAT Logical Reasoning question.

Save & drill this skill — build targeted practice sets from questions like this one
Video walkthroughs — watch every question solved step by step
81 official LSATs — as questions, timed sections & full-length tests

MetroBank made loans to ten small companies, in amounts ranging from $1,000 to $100,000.

Given that

These ten loans all had graduated payment plans, i.e., the scheduled monthly loan payment increased slightly each month over the five-year term of the loan.

How can it be that

The average payment received by MetroBank for these loans had decreased by the end of the five-year term.

Evaluate

Something must have changed along the way. If all ten loans were all making escalated payments month over month, then the average payment would have to go up.

Maybe some people made "extra" payments early on, which could reduce the principal on the loan and make the residual payments lower?

Which one of the following, if true, most helps to resolve the apparent discrepancy in the statements above?

The number of small companies
Out of Scope
The issue is the payment amount from the ten small companies. New companies are not relevant.
2% picked this
Several of the ten small
Out of Scope
This has nothing to do with the payments made to MetroBank.
1% picked this
Most banks offer a greater
Out of Scope
What other banks do is not relevant to the payments being made to MetroBank.
0% picked this
Correct
Of the ten small companies,
Why this is right
If only 7 loans remained at the end of the five-year term, then even though those 7 loans were each paying a higher monthly payment than they had in the past, the average payment collected for the ten loans could be lower. Let's say all ten loans started with companies needing to pay back $1,000 per month. The average payment collected for the ten loans would be $1,000. If by the end of the five years, the seven remaining loans are up to $1,200 / month but the other three loans (which are paid off) are now submitting $0 / month, the average payment collected on the ten loans would be $840. ($1,200 * 7 = $8400 in total, divided by ten)
Skill tested: Paradox · how this choice captures the argument's function is the move to repeat next time.
92% picked this
For some loans made by
Out of Scope
These loans are not the loans made to the ten small companies because they all had graduated payments where the payment increases over time.
5% picked this

Continue the review in LSAT Lab

Save this question, watch the video walkthrough, and drill similar questions in your LSAT Lab account.

Save and practice this skill

LSAT Lab

Turn this review into a targeted study plan.

Save this question, drill more like it, watch the video walkthrough, and track your progress in your LSAT Lab account.

Start practicing free