A government agency that reimburses its clients for bills : GMAT Critical Reasoning (CR)
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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]

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28 Oct 2010, 00:58
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63% (02:23) correct 37% (01:34) wrong based on 730 sessions

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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 $180 million last year. [Reveal] Spoiler: OA If you have any questions you can ask an expert New! Intern Joined: 06 Oct 2010 Posts: 14 Followers: 0 Kudos [?]: 8 [0], given: 3 Re: harming clients financially [#permalink] ### Show Tags 28 Oct 2010, 02:09 1 This post was BOOKMARKED IMO C. Critic will most try to find a flaw here. Since agency claims that delaying reimbursements will help the agency earn money, claim C says the reverse. Interest means extra charge. Lets say, if a person actually had to pay 100$, 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. Manager Joined: 17 Apr 2010 Posts: 108 Followers: 2 Kudos [?]: 57 [0], given: 12 Re: harming clients financially [#permalink] ### Show Tags 28 Oct 2010, 09:31 IMO C Retired Moderator Status: 2000 posts! I don't know whether I should feel great or sad about it! LOL Joined: 04 Oct 2009 Posts: 1712 Location: Peru Schools: Harvard, Stanford, Wharton, MIT & HKS (Government) WE 1: Economic research WE 2: Banking WE 3: Government: Foreign Trade and SMEs Followers: 96 Kudos [?]: 910 [0], given: 109 Re: harming clients financially [#permalink] ### Show Tags 28 Oct 2010, 11:57 +1 c _________________ "Life’s battle doesn’t always go to stronger or faster men; but sooner or later the man who wins is the one who thinks he can." My Integrated Reasoning Logbook / Diary: http://gmatclub.com/forum/my-ir-logbook-diary-133264.html GMAT Club Premium Membership - big benefits and savings GMAT Tutor Joined: 24 Jun 2008 Posts: 1183 Followers: 418 Kudos [?]: 1505 [0], given: 4 Re: harming clients financially [#permalink] ### Show Tags 28 Oct 2010, 15:07 Expert's post 1 This post was BOOKMARKED 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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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?

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11 Nov 2010, 07:39
C +1
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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! _________________ Jen Rugani GMAT Instructor Knewton, Inc. Sign up with Knewton and get all GMAT Club tests for free Manager Joined: 01 Nov 2010 Posts: 181 Location: Zürich, Switzerland Followers: 2 Kudos [?]: 38 [0], given: 20 Re: harming clients financially [#permalink] ### Show Tags 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. Manager Status: folding sleeves up Joined: 26 Apr 2013 Posts: 157 Location: India Concentration: Finance, Strategy GMAT 1: 530 Q39 V23 GMAT 2: 560 Q42 V26 GPA: 3.5 WE: Consulting (Computer Hardware) Followers: 1 Kudos [?]: 85 [0], given: 39 Re: A government agency that reimburses its clients for bills [#permalink] ### Show Tags 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 Senior Manager Joined: 03 May 2013 Posts: 356 Location: India Concentration: Operations, Human Resources Schools: ISB '16, IIMA (M) GPA: 4 WE: Human Resources (Human Resources) Followers: 3 Kudos [?]: 118 [0], given: 70 Re: A government agency that reimburses its clients for bills [#permalink] ### Show Tags 31 Jan 2014, 05:57 1 This post was BOOKMARKED 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.... Kudos if you please............... Manager Joined: 01 Oct 2013 Posts: 95 Schools: Haas '16, AGSM '16 Followers: 1 Kudos [?]: 19 [1] , given: 13 Re: A government agency that reimburses its clients for bills [#permalink] ### Show Tags 17 Mar 2015, 19:39 1 This post received KUDOS Type weaken Conclusion: delay in reimbursments would not harm clients financially. Assumption: delay in reimbursments would not harm clients financially. Weaken the assumption: Reimbursment harm the financial status of clients somehow 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. Intern Joined: 17 May 2015 Posts: 41 Followers: 0 Kudos [?]: 4 [0], given: 59 Re: A government agency that reimburses its clients for bills [#permalink] ### Show Tags 19 Nov 2015, 00:21 IanStewart wrote: 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.

What category does this come under like cause and effect or alternate cause or numbers and percentage. I cant seem to see what pattern this fall under?
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Re: A government agency that reimburses its clients for bills [#permalink]

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19 Nov 2015, 01:03
Quote:
What category does this come under like cause and effect or alternate cause or numbers and percentage. I cant seem to see what pattern this fall under?

I think this is a weaken question.
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26 Oct 2016, 00:18
I was struggling to choose between C and D.
can anyone help me to explain why D is wrong?
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A government agency that reimburses its clients for bills [#permalink]

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29 Oct 2016, 08:23
tanzzt wrote:
I was struggling to choose between C and D.
can anyone help me to explain why D is wrong?

In option D it is implied that the clients already had money to pay the bills. Since they did not have to take loan to pay the bills, it does not matter whether there is a delay of 40 days in getting the payment because they do not have to pay interest on the money and their net cash flow is 0. They pay x for the bill, and receive x as reimbursement.

Option C clearly shows a loss for the client. They pay the bill x plus the interest on x, but get reimbursement of only x. So net cash out flow is the interest. Therefore option C is better since it shows that the government's intention of not harming the clients financially is not achieved.
A government agency that reimburses its clients for bills   [#permalink] 29 Oct 2016, 08:23
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