At a certain supplier, a machine of type A costs $20,000 and

Question

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

A. $10,000
B. $11,200
C. $12,000
D. $12,800
E. $13,200

Bunuel · Accepted Answer

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;

Difference = 66,000 - 52,800 = 13,200.

Answer: E.

KarishmaB · Answer

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.

whiplash2411 · Answer

Let us set up a table as follows: Machine Cost.JPG As you can clearly see, the difference = 66000-52800 = 13200. Hence the answer is E.

fluke · Answer

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

Difference: 66000-52800=13200

Ans: "E"

mbafall2011 · Answer

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?

KarishmaB · Answer

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?

It has to be the overall cost.

PareshGmat · Answer

Cost of 2 Type A machines  = 8000 + \frac{80}{100} * 40000 * \frac{140}{100}

Cost of Type B machine  = 10000 + \frac{80}{100} * 50000 * \frac{140}{100}

Difference  = 2000 + \frac{140}{100} * \frac{80}{100} * 10000 = 13200

Answer = E

JeffTargetTestPrep · Answer

We are given that a machine of type A costs $20,000, and that a machine of type B costs $50,000. We are also given that 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.

We need to determine the difference in cost between 2 machines of type A and 1 machine of type B.

Let’s determine the cost, with finance charges, of 1 machine of type A.

Down payment = 20,000 x 0.2 = 4,000
Remainder = 20,000 - 4,000 = 16,000

Since the remainder of the cost is 16,000, the finance charge is 0.4 x 16,000 = 6,400.

Thus, machine A would cost 20,000 + 6,400 = 26,400, and two machines of type A would cost 26,400 x 2 = 52,800.

Now we can calculate the cost, with finance charges, of 1 machine of type B.

Down payment = 50,000 x 0.2 = 10,000
Remainder = 50,000 - 10,000 = 40,000

Since the remainder of the cost is 40,000, the finance charge is 0.4 x 40,000 = 16,000.

Thus, 1 machine of type B would cost 50,000 + 16,000 = 66,000.

The difference in cost between 2 machines of type A and 1 machine of type B is:

66,000 - 52,800 = 13,200

Answer: E

EMPOWERgmatRichC · Answer

Hi All,

This question is really just about basic arithmetic and staying organized. Based on the information in the prompt, there are two 'total costs' that we have to calculate...

Total cost of purchasing 2 Type A machines =

Base Price = (2)($20,000) = $40,000 
The 20% down payment = (.2)(2)($20,000) = $8,000 
40% Finance Charge on the remainder = (.4)($32,000) = $12,800

Total = $40,000 + $12,800 = $52,800

Total cost of purchasing 1 Type B machine =

Base Price = $50,000 
The 20% down payment = (.2)($50,000) = $10,000 
40% Finance Charge on the remainder = (.4)($40,000) = $16,000

Total = $50,000 + $16,000 = $66,000

The difference in those two totals is... $66,000 - $52,800 = $13,200

Final Answer:  E

GMAT assassins aren't born, they're made, 
Rich

MisterD · Answer

Cost of N unit of Machine= Nx (20% downpayment + 80% remaining sum + 40% of the 80% remaining sum) 
 = Nx (cost of 100% machine + cost of 32% machine)
 = N x (cost of 132% machine)

Cost of B Machine= 1x 132% x 50,000

Cost of A machines= 2 x 132% x 20,000=132% x 40,000

Cost of B machine-Cost of A machines= 132% x (50,000-40,000)=13,200

Answer: E

Probus · Answer

Lets Understand if we can find whats the FC :

DP = 20 % of CP
Remaining amount is = 80% CP
Finance Charges are = 40% (Remaining amount)= 40 % (80% CP)
Which means 
Finance Charges are= 32% CP
Irrespective of Costs of Machine the Finance Charges are always 32% CP

The additional amount over the cost we are paying for each machine is 32% CP as Finance Charges
Total cost of machine would then be = Intial Cost Price + 32%CP
Total Buying Price of each machine = 132% CP

B- 2 (Type A) = 132% (Difference in Initial cost) = 132%( 50K -2(20K)) = 132% (10K) = 13200

Alternatively
Note :
Difference in cost + Difference in Finance charges

= 10K + 32% ( Difference in cost )= 13200
 
Total Cost Price of Two type A machines = 40K
Total Finance Charges of Type A = 32% (40K)

Total Cost of two Type A Machines: Total Cost Price of Two type A machines + Total Finance Charges of Type A = 40K +32%(40K)

Cost of Type B Machine= 50K
Finance Charges of Type B = 32% (50K)
Total Cost of Type B= 50K+32%(50K)

CrackverbalGMAT · Answer

Down payment reduces the cost of the machine and Finance charges increase the cost of the machine.

Total Cost of Machine A = 20000 * 2 = 40,000

Total Cost of Machine B = 50,000

Difference in Cost = 50000 - 40000 = 10,000

20% Down payment = 0.2 * 10000 = 2,000

The finance charges are on Calculated on 10000 - 2000 = $8000

Difference in Finance charges = 40% of 8000 = 0.4 * 8000 = 3,200

Total Difference = 10000 + 3200 = $13,200

Option E

Arun Kumar

Kinshook · Answer

Given: 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.

Asked: If the finance charges= 40 percent of the remainder of the cost, how much less would 2 machines of type A cost than 1 machine of type B?

Total cost of machine A = 20,000*20% + 20,000*80%*140% = 4000 + 16000 + 6400 = 26,400
Total cost of machine B = 50,000*20% + 50,000*80%*140% = 10,000 + 40,000 + 16,000 = 66,000
Total cost of machine B - 2* Total cost of machine A = 66,000 - 2*26,400 = 66,000 - 52,800 = 13,200

IMO E

GMATCoachBen · Answer

Bunuel  In general, if I notice typos in questions, is it helpful to tag a moderator and flag them, so they can be cleaned up?

This one has a lot of typos here:

"If the finance charges= 40 percent of the rremainderof the cost,"

We could replace that with:

"If the finance charges equal 40 percent of the remainder of the cost,"

Thanks!

Bunuel · Answer

Yes, please! If you notice any typo, you are very welcome to tag me, or you can also use the “Report a Problem” option. You can report it by clicking the flag icon (“Report a problem” button) under each post. Thank you very much for helping keep things clean! https://gmatclub.com/forum/download/file.php?id=85982 GMAT-Club-Forum-vc7to59x.png

Bunuel · Answer

Edited the post. Thank you!

At a certain supplier, a machine of type A costs $20,000 and

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