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At a certain supplier, a machine of type A costs $20,000 and [#permalink] ### Show Tags 17 Jul 2010, 11:41 3 This post was BOOKMARKED 00:00 Difficulty: 65% (hard) Question Stats: 69% (03:18) correct 31% (02:19) wrong based on 196 sessions ### HideShow timer Statistics At a certain supplier, a machine of type A costs$20,000 and a machine of type B costs $50,000. Each machine can be purchased by making a 20 percent down payment and repaying the remainder of the cost and the finance charges over a period of time.If the finance charges= 40 percent of the rremainderof the cost, how much less would 2 machines of type A cost than 1 machine of type B? A.$10,000
B. $11,200 C.$12,000
D. $12,800 E.$13,200
[Reveal] Spoiler: OA

Last edited by Bunuel on 30 Mar 2012, 09:39, edited 1 time in total.
Edited the question
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17 Jul 2010, 15:50
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EnterMatrix wrote:
At a certain supplier, a machine of type A costs $20,000 and a machine of type B costs$50,000. Each machine can be purchased by making a 20 percent down payment and repaying the remainder of the cost and the finance charges over a period of time.If the finance charges= 40 percent of the rremainderof the cost, how much less would 2 machines of type A cost than 1 machine of type B?

a. $10,000 b.$11,200
c. $12,000 d.$12,800
e. $13,200 1 machine of type B will cost: 20% down payment of 50,000 = 10,000 plus remaining sum (50,000-10,000=40,000) with 40% of finance charges 40,000*1.4=56,000 --> 10,000+56,000=66,000; 2 machine of type A will cost: 20% down payment of 2*20,000 = 8,000 plus remaining sum (40,000-8,000=32,000) with 40% of finance charges 32,000*1.4=44,800 --> 8,000+44,800=52,800; Difference = 66,000 - 52,800 = 13,200. Answer: E. _________________ Manager Joined: 21 Feb 2010 Posts: 212 Followers: 1 Kudos [?]: 28 [0], given: 1 Re: Problem Solving [#permalink] ### Show Tags 17 Jul 2010, 17:10 i got the same answer E as bunuel did...what's the official answer? Manager Joined: 22 Mar 2010 Posts: 61 Followers: 1 Kudos [?]: 23 [0], given: 1 Re: Problem Solving [#permalink] ### Show Tags 18 Jul 2010, 01:20 OA is E...was just considering a 40% of the remaining cost instead of the 1.4 factor..so was stuck!! Thanks... Math Forum Moderator Joined: 20 Dec 2010 Posts: 2021 Followers: 161 Kudos [?]: 1705 [0], given: 376 Re: Tough GMAT prep PS [#permalink] ### Show Tags 21 Feb 2011, 04:43 2 A type machines cost: 40000. 20% down payment: 40000/5 = 8000 Remainder: 40000-8000=32000 Financial charges on remainder=32000*40/100=12800 Total money spent for 2 type A's = 12800+8000+32000=52800 1 B type machine cost: 50000 20% down payment: 50000/5=10000 Remainder: 50000-10000=40000 Financial charges on remainder=40000*40/100=16000 Total money spent for 1 type B = 16000+10000+40000=66000 Difference: 66000-52800=13200 Ans: "E" _________________ Veritas Prep GMAT Instructor Joined: 16 Oct 2010 Posts: 7125 Location: Pune, India Followers: 2137 Kudos [?]: 13667 [0], given: 222 Re: Tough GMAT prep PS [#permalink] ### Show Tags 21 Feb 2011, 18:09 mydreambschool wrote: Hi, Can someone please explain tough PS question from gmat prep. Please find screenshot attached in the word doc file. Many thanks. The cost of 2 machines of type A is 40,000 while the cost of one machine of type B is 50,000. The down payment and rate of interest are the same for both the cases. So all expenses will be same for both the cases except for the extra 10,000 to be paid in case of machine B and extra interest calculated as 40% of 8000 = 3200 (because out of 10,000, 20% down payment is 2000 and rest 8000 is the loaned amount) So we need to pay a total of 13,200 extra in case of machine B. _________________ Karishma Veritas Prep | GMAT Instructor My Blog Get started with Veritas Prep GMAT On Demand for$199

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22 Feb 2011, 11:58
E as well.
Although, is it ok to consider total cost at the end of payment period when there is no specific mention abt it?
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22 Feb 2011, 13:24
mbafall2011 wrote:
E as well.
Although, is it ok to consider total cost at the end of payment period when there is no specific mention abt it?

Yes, it will be the cost at the end of the period. The question stem says
"how much less would 2 machines of type A cost than 1 machine of type B?"

Consider this: I want to buy a car - either a Camry or an Accord
Camry down payment 20%, 6% interest on rest
Accord down payment 15%, 6% interest on rest
price of Camry $$, Price of Accord$$$etc etc.... How much less would an Accord cost as compared to Camry? It has to be the overall cost. _________________ Karishma Veritas Prep | GMAT Instructor My Blog Get started with Veritas Prep GMAT On Demand for$199

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27 Jun 2013, 00:46
fozzzy wrote:
Why do we multiply by 1.4 and not .4.. Please explain

It depends on the numbers you choose.

40% is applicable on the amount not paid already. Thus, you can have :

50000 + 0.4*40000 = 66000 [ We have anyways added the complete cost of the machine i.e. 50000, however, 40% on the amount which was not paid as down-payment is to be added]

Or

you can have 10000 + 1.4*40000 = 10000+(1+0.4)*40000 = 10000+40000+0.4*40000 = 50000+0.4*40000 ; this is exactly what we have above = 66000[ 50000 can be split in to two amounts; 10000 denotes the down-payment with no interest and the remaining 40000 with an interest of 40%]

Either ways, it is the same thing.
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18 Jul 2013, 11:39
A = 40,000
DP = 40,000*(20/100) = 8,000
Remaining = 32,000
F = R*(40/100)
F = 32,000*(40/100) = 12,800
C = DP + F + R
C = 8,000 + 12,800 + 32,000
C = 52,800

B = 50,000
DP = 50,000*(20/100) = 10,000
R = 40,000
F = 40,000*(40/100) = 16,000
C = 10,000 + 16,000 + 40,000
C = 66,000

66,000 - 52,800 = 13,200
E
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09 Jul 2016, 01:22
EnterMatrix wrote:
At a certain supplier, a machine of type A costs $20,000 and a machine of type B costs$50,000. Each machine can be purchased by making a 20 percent down payment and repaying the remainder of the cost and the finance charges over a period of time.If the finance charges= 40 percent of the remainder of the cost, how much less would 2 machines of type A cost than 1 machine of type B?

A. $10,000 B.$11,200
C. $12,000 D.$12,800
E. $13,200 Okay..I tried to reduce the amount of calculations..here's me take.. After all..how much do we have to pay? 20% down payment done.. we're left with 80%..on which 40% interest is accrued..in other words..112% Total amount to be paid..in each case..is 112% + 20% = 132% of the actual value So.. 1.32(50000 - 2*20000) = 13200 (E). _________________ Spread some love..Like = +1 Kudos Re: At a certain supplier, a machine of type A costs$20,000 and   [#permalink] 09 Jul 2016, 01:22
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