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

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08 Nov 2004, 12:20

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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?

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

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08 Nov 2004, 12:55

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"

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

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08 Nov 2004, 13:00

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

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09 Nov 2004, 00:07

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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)

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

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01 May 2005, 13:51

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?

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

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18 Jul 2015, 05:09

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

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31 Jan 2016, 23:05

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

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16 Jun 2016, 18:19

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.

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

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

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17 Jun 2016, 19:16

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.

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
_________________

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

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17 Jun 2016, 20:51

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.

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

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06 Aug 2016, 15:07

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.

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

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15 Sep 2017, 05:51

Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
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Re: A customer using a certain telephone calling plan pays a fee [#permalink]

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07 Oct 2017, 05:03

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

Answer (C)

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