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At a certain supplier, a machine of type A costs $20,000 and [#permalink]

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17 Jul 2010, 12:41

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Difficulty:

65% (hard)

Question Stats:

69% (03:27) correct
31% (02:16) wrong based on 156 sessions

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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

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;

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

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. _________________

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?

Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink]

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27 Jun 2013, 01:46

Expert's post

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. _________________

Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink]

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18 Jul 2013, 12:39

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

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