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