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gayathri
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A customer using a certain telephone calling plan pays a fee Updated on: 19 Jul 2015, 03:53
Originally posted by gayathri on 08 Nov 2004, 13:20.
Last edited by Bunuel on 19 Jul 2015, 03:53, edited 1 time in total.
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C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!

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95% (hard)

Question Stats:

36% (03:12) correct 64% (03:27) wrong based on 651 sessions

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A customer using a certain telephone calling plan pays a fee of $25 per month, and then receives a discount of 40% on the regular charge for all calls made to country A. If calls to country A are regularly charged at $1.60 per minute for the first 3 minutes, and $0.80 per minute for each minute thereafter, what is the maximum the customer could have saved over regular prices if he was charged for 1 hour of calls made to country A in a certain month?

A. $8.75
B. $12
C. $13.40
D. $17.40
E. $24.40
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C
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A customer using a certain telephone calling plan pays a fee 09 Nov 2004, 01:07
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gayathri
A customer using a certain telephone calling plan pays a fee of $25 per month, and then receives a discount of 40% on the regular charge for all calls made to country A. If calls to country A are regularly charged at $1.60 per minute for the first 3 minutes, and $0.80 per minute for each minute thereafter, what is the maximum the customer could have saved over regular prices if he was charged for 1 hour of calls made to country A in a certain month?

1) $8.75
2) $12
3) $13.40
4) $17.40
5) $24.40
Show more


Like the other poster pointed out, the key is, what is the MAX the customer could have saved using the savings plan? Well, you save the most (in absolute dollar terms) by incurring the biggest phone bill possible. And how do you do that? You call for 3 minutes (get charged at $1.60 per minute) hang up, and then do that 20 times, since the question said you must talk for 1 hour.

So you are charged 1.60 per minute for 60 minutes = 96. This is what it normally costs you with no discount.

If you have the discount, you have to pay the $25 connection fee BUT you only pay 60% of the phone bill (40% savings): 0.6 * 96 = 57.6. So the total comes out to $25 + $57.6 = $82.6

So you save $96 - $82.6 = $13.4 or answer choice (3)
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A customer using a certain telephone calling plan pays a fee 01 Feb 2016, 00:05
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A customer using a certain telephone calling plan
  • pays a fee of $25 per month
  • receives a discount of 40% on the regular charge for all calls made to country A.

Regular call charges to country A
    $1.60 per minute for the first 3 minutes, and
    $0.80 per minute for each minute

what is the maximum the customer could have saved over regular prices if he was charged for 1 hour of calls made to country A in a certain month?

for maximum he could have saved, we need find max he could have spent without having a plan.
so we assume all calls are of duration less than 3 minutes i.e., charge is 1.6 per min.
we have an hour thus 60 minutes.

charge=60*1.6=96
charge after applying the discount=\(96*(1-\frac{40}{100})\)=57.6
plan fee=25
Total charges=25+57.6=82.6
Regular total charge as calculated above could have been 96-82.6=13.4
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A customer using a certain telephone calling plan pays a fee 16 Jun 2016, 19:19
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Nevernevergiveup
A customer using a certain telephone calling plan
  • pays a fee of $25 per month
  • receives a discount of 40% on the regular charge for all calls made to country A.

Regular call charges to country A
    $1.60 per minute for the first 3 minutes, and
    $0.80 per minute for each minute

what is the maximum the customer could have saved over regular prices if he was charged for 1 hour of calls made to country A in a certain month?

for maximum he could have saved, we need find max he could have spent without having a plan.
so we assume all calls are of duration less than 3 minutes i.e., charge is 1.6 per min.
we have an hour thus 60 minutes.

charge=60*1.6=96
charge after applying the discount=\(96*(1-\frac{40}{100})\)=57.6
plan fee=25
Total charges=25+57.6=82.6
Regular total charge as calculated above could have been 96-82.6=13.4
Show more

Hi Nevernevergiveup,

I understand that the most expensive way is making continuous 3-minute calls until you get to 60 minutes. However, using the monthly plan, the cheapest way to call is to call 1 hour straight and pay total of 25 + 40%*(1.6*3 + 0.8*57) = 45.16.

So, the maximum saving would be 96 - 45.16 = 50.84, would it not? I understand it is not an answer choice, but I think that how you must interpret the question.
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A customer using a certain telephone calling plan pays a fee 16 Jun 2016, 21:43
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gayathri
A customer using a certain telephone calling plan pays a fee of $25 per month, and then receives a discount of 40% on the regular charge for all calls made to country A. If calls to country A are regularly charged at $1.60 per minute for the first 3 minutes, and $0.80 per minute for each minute thereafter, what is the maximum the customer could have saved over regular prices if he was charged for 1 hour of calls made to country A in a certain month?

A. $8.75
B. $12
C. $13.40
D. $17.40
E. $24.40
Show more

Discount = 40% of spending

We want to maximise discount so we will need to maximise spending. We do that by assuming that 60 calls were made of 1 min each because the first minute is the most expensive.

Max discount = (40/100)* 60 * 1.6 = (40/100)*96
This would be slightly less than 40. About 38 to 39.

Saving = (Slightly less than 40) - 25 = Slightly less than 15

Answer (C)
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A customer using a certain telephone calling plan pays a fee 17 Jun 2016, 20:16
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gayathri
A customer using a certain telephone calling plan pays a fee of $25 per month, and then receives a discount of 40% on the regular charge for all calls made to country A. If calls to country A are regularly charged at $1.60 per minute for the first 3 minutes, and $0.80 per minute for each minute thereafter, what is the maximum the customer could have saved over regular prices if he was charged for 1 hour of calls made to country A in a certain month?

A. $8.75
B. $12
C. $13.40
D. $17.40
E. $24.40

Discount = 40% of spending

We want to maximise discount so we will need to maximise spending. We do that by assuming that 60 calls were made of 1 min each because the first minute is the most expensive.

Max discount = (40/100)* 60 * 1.6 = (40/100)*96
This would be slightly less than 40. About 38 to 39.

Saving = (Slightly less than 40) - 25 = Slightly less than 15

Answer (C)
Show more

Hi Karishma,

I posted my issue with the answer to this question already, but I was hoping you could help clarify. I understand that the most expensive way is making continuous 3-minute calls until you get to 60 minutes. However, using the monthly plan, the cheapest way to call is to call 1 hour straight and pay total of 25 + 40%*(1.6*3 + 0.8*57) = 45.16.

So, the maximum saving would be 96 - 45.16 = 50.84, would it not? I understand it is not an answer choice, but I think that how you must interpret the question.

Thank you.
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A customer using a certain telephone calling plan pays a fee 17 Jun 2016, 21:42
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VeritasPrepKarishma
gayathri
A customer using a certain telephone calling plan pays a fee of $25 per month, and then receives a discount of 40% on the regular charge for all calls made to country A. If calls to country A are regularly charged at $1.60 per minute for the first 3 minutes, and $0.80 per minute for each minute thereafter, what is the maximum the customer could have saved over regular prices if he was charged for 1 hour of calls made to country A in a certain month?

A. $8.75
B. $12
C. $13.40
D. $17.40
E. $24.40

Discount = 40% of spending

We want to maximise discount so we will need to maximise spending. We do that by assuming that 60 calls were made of 1 min each because the first minute is the most expensive.

Max discount = (40/100)* 60 * 1.6 = (40/100)*96
This would be slightly less than 40. About 38 to 39.

Saving = (Slightly less than 40) - 25 = Slightly less than 15

Answer (C)

Hi Karishma,

I posted my issue with the answer to this question already, but I was hoping you could help clarify. I understand that the most expensive way is making continuous 3-minute calls until you get to 60 minutes. However, using the monthly plan, the cheapest way to call is to call 1 hour straight and pay total of 25 + 40%*(1.6*3 + 0.8*57) = 45.16.

So, the maximum saving would be 96 - 45.16 = 50.84, would it not? I understand it is not an answer choice, but I think that how you must interpret the question.

Thank you.
Show more

Hi,
But in that case the initial expenditure will not be 96 but (1.6*3 + 0.8*57) = 50.4.....
so the saving is 50.4 - 45.16 nearly 5....

As the savings are 40% of expenditure, we have to make the expenditure the MAX, so we take that each call was of 1 minute each and he paid 1.6 * 60 = 96..
and then due to the plan he had to pay 25 + .6*96 = 57.6 +25 = 82.6..
and savings = 96-82.6 = 13.4
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A customer using a certain telephone calling plan pays a fee 13 Dec 2018, 23:30
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you paid $25 to get the 40% discount plan. So you will spend maximum amount to utilize the plan.

your target is to get max bill. and that will achieved by talking at maximum rates( 3 minutes talk per call). if you talk more than 3 minutes you will be charged less.

to get max bill you will made at least 20 call of 3 minutes each.

monthly bill without plan-
=1.6*3*20
=96-----------(1)

monthly bill with discount plan-
= 96*0.6(40% discount)
=57.6---------(2)

savings= (1)-(2)
=96-57.6
=38.4------------(3)

but you already paying $25 for the plan

max savings= 38.4-25
=13.4

answer is (c)
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A customer using a certain telephone calling plan pays a fee 29 Mar 2025, 00:23
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A customer using a certain telephone calling plan pays a fee of $25 per month, and then receives a discount of 40% on the regular charge for all calls made to country A.

If calls to country A are regularly charged at $1.60 per minute for the first 3 minutes, and $0.80 per minute for each minute thereafter, what is the maximum the customer could have saved over regular prices if he was charged for 1 hour of calls made to country A in a certain month?

Maximum calls bill possible = $1.6*60 = $96
Maximum discount possible = 40%*$96 = $38.4

Maximum amount saved = $38.4 - $25 =$13.40

IMO C
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