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A government agency that reimburses its clients for bills

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A government agency that reimburses its clients for bills [#permalink] New post 28 Oct 2010, 00:58
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A government agency that reimburses its clients for bills they have paid for child care has had this year’s budget cut. To save money without cutting reimbursements or otherwise harming clients financially, it plans to delay reimbursements to clients for forty days, thereby earning 180 million per year in interest on the reimbursement money.

Which of the following, if true, is the best criticism of the agency’s plan?

(A) Daycares typically hold parents responsible for the ultimate payment of their bills.
(B) The agency cannot save money by cutting staff because it is already understaffed.
(C) Some clients borrow money to pay their daycare bills and they will pay forty extra days of interest on these loans.
(D) Some clients pay their daycare bills immediately, but they often taken more than forty days to file with the agency for reimbursement.
(E) The agency’s budget was cut by more than $180 million last year.
[Reveal] Spoiler: OA
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Re: harming clients financially [#permalink] New post 28 Oct 2010, 02:09
IMO C.
Critic will most try to find a flaw here.

Since agency claims that delaying reimbursements will help the agency earn money, claim C says the reverse.
Interest means extra charge. Lets say, if a person actually had to pay 100$, due to the interest, he will now claim for (100$+interest amount say 10$ = 110$) thus more money will be claimed. Hence this is the best argument against the agency's claim.
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Re: harming clients financially [#permalink] New post 28 Oct 2010, 09:31
IMO C
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Re: harming clients financially [#permalink] New post 28 Oct 2010, 11:57
+1 c 8-)
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Re: harming clients financially [#permalink] New post 28 Oct 2010, 15:07
feruz77 wrote:
A government agency that reimburses its clients for bills they have paid for child care has had this year’s budget cut. To save money without cutting reimbursements or otherwise harming clients financially, it plans to delay reimbursements to clients for forty days, thereby earning 180 million per year in interest on the reimbursement money.

Which of the following, if true, is the best criticism of the agency’s plan?

(A) Daycares typically hold parents responsible for the ultimate payment of their bills.
(B) The agency cannot save money by cutting staff because it is already understaffed.
(C) Some clients borrow money to pay their daycare bills and they will pay forty extra days of interest on these loans.
(D) Some clients pay their daycare bills immediately, but they often taken more than forty days to file with the agency for reimbursement.
(E) The agency’s budget was cut by more than $180 million last year.


The answer is C because of the portion I've highlighted above. If C is true, the plan *will* harm clients financially, so the plan will not achieve one of its goals.
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Re: harming clients financially [#permalink] New post 10 Nov 2010, 12:20
I understand why C is correct. It was my first choice..

But I don't understand why E is wrong!! If the budget is cut by more than 180 million, the plan will not work anyway..no?

Please help!!
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Re: harming clients financially [#permalink] New post 11 Nov 2010, 07:39
C +1
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Re: harming clients financially [#permalink] New post 16 Nov 2010, 09:00
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@maive, it's great that C was your first choice and that you got this one correct! The problem with E is that it doesn't have any to do with causing financial harm to clients.

We're specifically told in the argument that the purpose of the plan is to avoid cutting reimbursements or harming clients financially. Even if the budget was cut by more than $180 million last year (the amount that they expect to earn back in interest with the new plan), there are still other things the agency could to save money without harming clients financially (cut employee salaries, move into cheaper office space, etc.)

Only answer choice C states that the forty-day delay will cause financial harm to some clients, so that's the best criticism of the plan.

Hope that helps!
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Re: harming clients financially [#permalink] New post 09 Dec 2010, 04:34
Quote:
maive:- But I don't understand why E is wrong!! If the budget is cut by more than 180 million, the plan will not work anyway..no?



I believe this is since E is not dampening the main concerns. The stated main concerns are- not to harm clients financially and cost cutting.
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Re: A government agency that reimburses its clients for bills [#permalink] New post 30 Jan 2014, 21:01
How can we assume that the government will pay for the interest (as per option C) when the premise states "A government agency that reimburses its clients for bills they have paid for child care". It says only bills not about the interest on the another loan taken in the mean time.

Please help me to understand this
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Re: A government agency that reimburses its clients for bills [#permalink] New post 31 Jan 2014, 05:57
email2vm

you have not understood option "c'' correctly........
what it means is as follows....

- I incur $1000 on medical expenses and take a loan for payment of same.......
- After 40 days i am reimbursed $ 1000 by the government agency.....which i use to repay my loan... but the borrower asks for $ 1100 (loan amount + interest on loan)
- I have to pay additional $ 100 from my pocket.....hence the argument that no affect of the new system accrues on the me ( ie citizen) is incorrect.....


HENCE "C" CORRECT....


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Re: A government agency that reimburses its clients for bills   [#permalink] 31 Jan 2014, 05:57
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