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# At a certain supplier, a machine of type A costs $20,000 and SORT BY: Tags: Show Tags Hide Tags Intern Joined: 22 Mar 2010 Posts: 35 Own Kudos [?]: 215 [53] Given Kudos: 1 Most Helpful Reply Math Expert Joined: 02 Sep 2009 Posts: 94837 Own Kudos [?]: 647985 [14] Given Kudos: 86892 General Discussion SVP Joined: 09 Jun 2010 Status:Three Down. Posts: 1763 Own Kudos [?]: 3489 [3] Given Kudos: 210 Concentration: General Management, Nonprofit Retired Moderator Joined: 20 Dec 2010 Posts: 1107 Own Kudos [?]: 4765 [1] Given Kudos: 376 Re: Tough GMAT prep PS [#permalink] 1 Kudos 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" Tutor Joined: 16 Oct 2010 Posts: 15209 Own Kudos [?]: 67218 [3] Given Kudos: 437 Location: Pune, India Re: Tough GMAT prep PS [#permalink] 3 Kudos Expert Reply mydreambschool wrote: Hi, Can someone please explain tough PS question from gmat prep. Please find screenshot attached in the word doc file. Many thanks. 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. Manager Joined: 21 Mar 2010 Posts: 240 Own Kudos [?]: 81 [0] Given Kudos: 33 Re: Problem Solving [#permalink] 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? Tutor Joined: 16 Oct 2010 Posts: 15209 Own Kudos [?]: 67218 [0] Given Kudos: 437 Location: Pune, India Re: Problem Solving [#permalink] Expert Reply mbafall2011 wrote: 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? 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.
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Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink] 2 Kudos 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 Target Test Prep Representative Joined: 04 Mar 2011 Status:Head GMAT Instructor Affiliations: Target Test Prep Posts: 3036 Own Kudos [?]: 6670 [0] Given Kudos: 1646 Re: At a certain supplier, a machine of type A costs$20,000 and [#permalink]
EnterMatrix wrote:
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 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 GMAT Club Legend Joined: 19 Dec 2014 Status:GMAT Assassin/Co-Founder Affiliations: EMPOWERgmat Posts: 21835 Own Kudos [?]: 11821 [0] Given Kudos: 450 Location: United States (CA) GMAT 1: 800 Q51 V49 GRE 1: Q170 V170 Re: At a certain supplier, a machine of type A costs$20,000 and [#permalink]
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

GMAT assassins aren't born, they're made,
Rich
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Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink] 1 Kudos 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 Manager Joined: 10 Apr 2018 Posts: 185 Own Kudos [?]: 459 [0] Given Kudos: 115 Location: United States (NC) Re: At a certain supplier, a machine of type A costs$20,000 and [#permalink]
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)
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Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink] Top Contributor 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 GMAT Club Legend Joined: 03 Jun 2019 Posts: 5328 Own Kudos [?]: 4280 [0] Given Kudos: 161 Location: India GMAT 1: 690 Q50 V34 WE:Engineering (Transportation) Re: At a certain supplier, a machine of type A costs$20,000 and [#permalink]
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
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