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)