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# A customer using a certain telephone calling plan pays a fee

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Director
Joined: 07 Nov 2004
Posts: 673
A customer using a certain telephone calling plan pays a fee [#permalink]

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08 Nov 2004, 13:20
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95% (hard)

Question Stats:

42% (02:47) correct 58% (03:03) wrong based on 423 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
[Reveal] Spoiler: OA

Last edited by Bunuel on 19 Jul 2015, 03:53, edited 1 time in total.
Director
Joined: 16 Jun 2004
Posts: 890
Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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08 Nov 2004, 13:45
I am not getting any number in the ans choices... let me work it out again...can u check in the meantime on the ans choices..
Director
Joined: 07 Nov 2004
Posts: 673
Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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08 Nov 2004, 13:55
Venksune, the answer choices are rt. The question is deliberately tricky. The key phrase in the question is "what is the MAXIMUM the customer could have saved"

Its from Kaplan.
GMAT Club Legend
Joined: 15 Dec 2003
Posts: 4262
Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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08 Nov 2004, 14:00
Yes, I clearly remember getting this one in one of their CAT test and this one is just SO wordy. It's not hard in and of itself but the difficulty level is significantly heigthened in actual exam conditions.
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Director
Joined: 16 Jun 2004
Posts: 890
Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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08 Nov 2004, 14:06
Getting 13.40 (96-82.6). Sleepy..I type 32.4 earlier..why did I do that?
Intern
Joined: 08 Nov 2004
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Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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09 Nov 2004, 01:07
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gayathri wrote:
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

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)
VP
Joined: 25 Nov 2004
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Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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01 May 2005, 14:51
gayathri wrote:
OA is $13.40 I was reviewig the old postings. i found this question discussed here. But OA should be$24.40.

It was discussed later too and explained nicely by Honghu.

gayathri wrote:
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
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Location: India
A customer using a certain telephone calling plan pays a fee [#permalink]

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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 _________________ The only time you can lose is when you give up. Try hard and you will suceed. Thanks = Kudos. Kudos are appreciated http://gmatclub.com/forum/rules-for-posting-in-verbal-gmat-forum-134642.html When you post a question Pls. Provide its source & TAG your questions Avoid posting from unreliable sources. My posts http://gmatclub.com/forum/beauty-of-coordinate-geometry-213760.html#p1649924 http://gmatclub.com/forum/calling-all-march-april-gmat-takers-who-want-to-cross-213154.html http://gmatclub.com/forum/possessive-pronouns-200496.html http://gmatclub.com/forum/double-negatives-206717.html http://gmatclub.com/forum/the-greatest-integer-function-223595.html#p1721773 https://gmatclub.com/forum/improve-reading-habit-233410.html#p1802265 Intern Joined: 23 Apr 2016 Posts: 20 Location: United States Concentration: Finance, Economics Re: A customer using a certain telephone calling plan pays a fee [#permalink] ### Show Tags 16 Jun 2016, 19:19 Nevernevergiveup wrote: 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

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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Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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16 Jun 2016, 21:43
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gayathri wrote:
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

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Get started with Veritas Prep GMAT On Demand for $199 Veritas Prep Reviews Intern Joined: 23 Apr 2016 Posts: 20 Location: United States Concentration: Finance, Economics Re: A customer using a certain telephone calling plan pays a fee [#permalink] ### Show Tags 17 Jun 2016, 20:16 VeritasPrepKarishma wrote: gayathri wrote: 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. Math Expert Joined: 02 Aug 2009 Posts: 5732 A customer using a certain telephone calling plan pays a fee [#permalink] ### Show Tags 17 Jun 2016, 21:42 1 This post received KUDOS Expert's post TheLostBear wrote: VeritasPrepKarishma wrote: gayathri wrote: 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. 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 _________________ Absolute modulus :http://gmatclub.com/forum/absolute-modulus-a-better-understanding-210849.html#p1622372 Combination of similar and dissimilar things : http://gmatclub.com/forum/topic215915.html GMAT online Tutor Intern Joined: 23 Apr 2016 Posts: 20 Location: United States Concentration: Finance, Economics Re: A customer using a certain telephone calling plan pays a fee [#permalink] ### Show Tags 17 Jun 2016, 21:51 chetan2u wrote: TheLostBear wrote: VeritasPrepKarishma wrote: 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. 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 Thank you chetan2u. I think my issue with the question is that the stem does not explicitly say we have to follow the same way of calling to country A in both regular and discount methods. I guess I am just reading into the question too much, but your way of putting it makes sense. Intern Joined: 07 May 2016 Posts: 28 Re: A customer using a certain telephone calling plan pays a fee [#permalink] ### Show Tags 06 Aug 2016, 16:07 This problem was difficult for me to answer because it was not clear. More specifically the following points were ambiguous: 1) The$25 fee only applies to the discount, and not BOTH cases
2) The charge for the first 3 minutes is PER PHONE CALL.

This leads me to ask if this is an actual GMAT question. The difficulty of this question comes from the interpretation, which is vague.
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Joined: 19 Aug 2016
Posts: 73
Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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07 Oct 2017, 06:03
VeritasPrepKarishma wrote:
gayathri wrote:
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

We have got a discount of 40 % then don't u think we should do 60/100*96

Kindly explain..

Thanks
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Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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24 Dec 2017, 06:47
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KUDOS
TheLostBear wrote:
chetan2u wrote:
TheLostBear wrote:
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.

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

Thank you chetan2u. I think my issue with the question is that the stem does not explicitly say we have to follow the same way of calling to country A in both regular and discount methods. I guess I am just reading into the question too much, but your way of putting it makes sense.

I am also having the same doubt. If we want to show the max savings possible, we shall take the max expenditure
+discount and minimum expenditure +discount(which will be made by having a straight 1 hour call.)

Re: A customer using a certain telephone calling plan pays a fee   [#permalink] 24 Dec 2017, 06:47
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