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At a certain supplier, a machine of type A costs $20,000 and

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At a certain supplier, a machine of type A costs $20,000 and [#permalink] New post 17 Jul 2010, 11:41
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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.
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Re: Problem Solving [#permalink] New post 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.
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Re: Problem Solving [#permalink] New post 17 Jul 2010, 17:10
i got the same answer E as bunuel did...what's the official answer?
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Re: Problem Solving [#permalink] New post 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...
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Re: Tough GMAT prep PS [#permalink] New post 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"
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Re: Tough GMAT prep PS [#permalink] New post 21 Feb 2011, 18:09
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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.
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Re: Problem Solving [#permalink] New post 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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Re: Problem Solving [#permalink] New post 22 Feb 2011, 13:24
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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.
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Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink] New post 27 Jun 2013, 00:27
Why do we multiply by 1.4 and not .4.. Please explain
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Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink] New post 27 Jun 2013, 00:46
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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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Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink] New post 16 Jul 2013, 23:59
Down payment for A 20000 * 20/100 = 4000

Remaining is 20000- 4000 = 16000

finance charge for A is 40/100 * 16000 = 6400

Total cost is ( 16000 + 4000 + 6400) = 26400

Since we have 2 machines total cost is 26400 * 2 = 52800

Now for B

Down payment is 50000 * 20/100 = 10000

Remainder is (50000 - 10000) 40000

Finance is on the remainder so 40000 * 40/100 = 16000

Total cost for B is ( 40000 + 10000 + 16000) = 66000

66000 - 52800 = 13200

Answer is E
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Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink] New post 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
Re: At a certain supplier, a machine of type A costs $20,000 and   [#permalink] 18 Jul 2013, 11:39
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