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Two payment schemes are available for customers in the N'K store. The first scheme includes a downpayment of 20% of the purchase price and 10 monthly payments of 10% each. The second includes a downpayment of 10% and 20 monthly payments of 8% each. If a customer buys a TV for $216, by what percent will he find the first scheme cheaper than the second (approximately)?

One, it's much eaiser to solve this question if you ignore the $216 figure in your calculation. So you know the cost is 120 for scheme one and 170 for scheme two. The difference is 50. Then you calculate the percentage.

Second, when we say how much cheaper is A than B we use B as the base. Therefore you calcuate the percentage by 50/170 and gets 30% since 17*3=51. Now the problem is often in a test we are not sure if we should do 50/120 or 50/170. Fortunetaly for this question 50/120 is over 40% (50>12*4=48) and it is not in the list of choices. So you know 120 cannot be the base and then you go back to the question to verify that 170 is indeed the base. These little tricks may not sound significant but they could be big time savers at your test.
_________________

Keep on asking, and it will be given you;
keep on seeking, and you will find;
keep on knocking, and it will be opened to you.

weird ... the answer i get isnt one of the options

scheme 1:

down payment = $43.20
remaining payment = 216-43.20 = 172.80
10% of this is $17.28
10 months of this payment is 172.80
total payment = 43.20+172.80 = 216

scheme 2

down payment = $21.60
remaining payment = 216-21.60 = 194.40
8% of this is $15.52
20 months of this payment is 311.04
total payment = 21.60+311.01 = 332.64

The key to this question is to realise that since everything is asked in percents we do not need to get in to the math with 216 just take 100 as a based and do it. 50/170 is the answer. ALso the question is how much cheaper is first from second so it is difference / second.

If the question would ahve been how much expensive is second from first then equation would have been 50/ 120. Right??

pmenon: I know it doesn't make any sense when compared to the "real world" but you don't subtract the down payment before figuring out the monthly payments. It's a 20% down payment and then 10 payments of 10% of the original price

pmenon: I know it doesn't make any sense when compared to the "real world" but you don't subtract the down payment before figuring out the monthly payments. It's a 20% down payment and then 10 payments of 10% of the original price

thanks ! that does seem a little strange though, lol.

ok, if i go that route, i seem to be ending up with 34% as the answer

downpayments are 43.2 and 21.6
monthly payments are 21.6 and 17.28
total monthly is 216 and 345.6

once again, you're taking 10% and 8% of the NEW total AFTER you remove the initial down payment. The question doesn't specify where it's taking the monthly percentage from so I believe it comes straight from the original $216. Poorly worded question where the answer depends on where you're getting your numbers from.

Do we have an OA for it? I think if they wanted us to pull the percent from another number they would specify that.

for first scheme, total cost is $120 and it is $170 and since question is how cheaper is first the anser would be 100*(170-120)/170 ~=30 % so answer should be C

Two payment schemes are available for customers in the N'K store. The first scheme implies a downpayment of 20% of the purchase price and 10 monthly payments of 10% each. The second implies a downpayment of 10% and 20 monthly payments of 8% each. If a customer buys a TV for $216, by what percent will he find the first scheme cheaper than the second (approximately)?

14% 27% 30% 34% 35%

first way: 0.20*216 + 216 (10% of 216 per 10 payments)=(216/5) +216=1296/5 second way: 0.10*216+8*216*0.20 (8% of 216 per 20 payments)=(216+3456)/10=3672/10

Fully agree. The result will be the same whatever the price. It is just here to make things confusing. Whatever it is you will pay 170 percent in one case and 120 percent in the other. Hence 30 percent difference (50/170). The real world difference would be different as time value for money would have to be accounted for. Here we assume 100 paid now has the same value has 100 paid in few months.

When taken into percentages the problem becomes a lot easier. Its easier to think in terms of 120% and 170% rather than jump to the numbers and start solving. Need to think like this going forward.
_________________

One, it's much eaiser to solve this question if you ignore the $216 figure in your calculation. So you know the cost is 120 for scheme one and 170 for scheme two. The difference is 50. Then you calculate the percentage.

Second, when we say how much cheaper is A than B we use B as the base. Therefore you calcuate the percentage by 50/170 and gets 30% since 17*3=51. Now the problem is often in a test we are not sure if we should do 50/120 or 50/170. Fortunetaly for this question 50/120 is over 40% (50>12*4=48) and it is not in the list of choices. So you know 120 cannot be the base and then you go back to the question to verify that 170 is indeed the base. These little tricks may not sound significant but they could be big time savers at your test.

Can someone please explain, how to calculate cost of schemes i.e 120 & 170.
_________________

The key to this question is to realise that since everything is asked in percents we do not need to get in to the math with 216 just take 100 as a based and do it. 50/170 is the answer. ALso the question is how much cheaper is first from second so it is difference / second.

If the question would ahve been how much expensive is second from first then equation would have been 50/ 120. Right??

Vivek

Kudos if you agree

Agree with you, Wvivek. I think this is the best way to solve this, to avoid any confusing/time taking calculation.

One, it's much eaiser to solve this question if you ignore the $216 figure in your calculation. So you know the cost is 120 for scheme one and 170 for scheme two. The difference is 50. Then you calculate the percentage.

Second, when we say how much cheaper is A than B we use B as the base. Therefore you calcuate the percentage by 50/170 and gets 30% since 17*3=51. Now the problem is often in a test we are not sure if we should do 50/120 or 50/170. Fortunetaly for this question 50/120 is over 40% (50>12*4=48) and it is not in the list of choices. So you know 120 cannot be the base and then you go back to the question to verify that 170 is indeed the base. These little tricks may not sound significant but they could be big time savers at your test.

Can someone please explain, how to calculate cost of schemes i.e 120 & 170.

whats up guys ???

The question is: by what percent will he find the first scheme cheaper than the second (approximately)?

First is cheaper than the second by ... - means the reference is the second payment, we compare the first payment to the second payment. Therefore we should calculate 50/170.

50/120 would be the answer to the question by what percent will he find the second scheme more expensive than the first (approximately)? Now the reference is the first payment, and we compare the second payment to the first payment.
_________________

PhD in Applied Mathematics Love GMAT Quant questions and running.