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Difficulty:   65% (hard)

Question Stats: 65% (02:51) correct 35% (02:47) wrong based on 458 sessions

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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 Originally posted by EnterMatrix on 17 Jul 2010, 12:41. Last edited by Bunuel on 30 Mar 2012, 10:39, edited 1 time in total. Edited the question ##### Most Helpful Expert Reply Math Expert V Joined: 02 Sep 2009 Posts: 58991 Re: Problem Solving [#permalink] ### Show Tags 7 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

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.

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2
Let us set up a table as follows:

Attachment: Machine Cost.JPG [ 15 KiB | Viewed 6756 times ]

As you can clearly see, the difference = 66000-52800 = 13200.

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Re: Tough GMAT prep PS  [#permalink]

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1
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"
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Re: Tough GMAT prep PS  [#permalink]

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1
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.
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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?
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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. _________________ Karishma Veritas Prep GMAT Instructor Learn more about how Veritas Prep can help you achieve a great GMAT score by checking out their GMAT Prep Options > SVP  Status: The Best Or Nothing Joined: 27 Dec 2012 Posts: 1731 Location: India Concentration: General Management, Technology WE: Information Technology (Computer Software) Re: At a certain supplier, a machine of type A costs$20,000 and  [#permalink]

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1
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 $$= 2000 + \frac{140}{100} * \frac{80}{100} * 10000 = 13200$$

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Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink] ### Show Tags 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

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GMAT 1: 800 Q51 V49 GRE 1: Q170 V170 Re: At a certain supplier, a machine of type A costs $20,000 and [#permalink] ### Show Tags 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: GMAT assassins aren't born, they're made, Rich _________________ Intern  B Joined: 07 Jan 2018 Posts: 10 Re: At a certain supplier, a machine of type A costs$20,000 and  [#permalink]

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1
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

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Re: Prep Question...not agree with OA  [#permalink]

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