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20 Dec 2021, 18:20
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E
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Difficulty:
85%
(hard)
Question Stats:
58% (02:30) correct
42%
(03:01)
wrong
based on 188
sessions
History
Date
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Jenny crashes a $50,000 cost car while taking her test and reduces its value by 60%. Fortunately, she can claim cash insurance for the damage caused and is paid back 75% of the value lost. The car is fixed for a cost of $10,000 and later sold for $47,500. How much profit or loss was made on the sale of the car?
A. $20,000 profit
B. $2,500 loss
C. $17,500 loss
D. $0 profit / loss
E. $10,000 profit
A. $20,000 profit
B. $2,500 loss
C. $17,500 loss
D. $0 profit / loss
E. $10,000 profit
20 Dec 2021, 18:48
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It seems like a strange car if it loses $30,000 in value but then can be repaired for only $10,000 and resold at essentially its purchase price.
Anyway, the car lost 60% of $50,000 in value, or $30,000, but the person was repaid 3/4 of that, so was repaid (3/4)(30,000) = 22,500. So overall the person paid $50,000 for the car and $10,000 for repairs, and was paid $22,500 by the insurance company and $47,500 by whoever bought the car, and net the person took in $70,000 and spent $60,000. So over the course of the events described in the question, the person made a $10,000 profit. That's not actually what the question asks for though -- the question asks only for the profit or loss on the sale of the car. The car was bought for $50,000 and sold for $47,500, so on the sale of the car alone, there was a $2500 loss. So as written, the answer is $2500, but considering how much detail the question provides about insurance etc, I imagine the question writer meant to ask something else, and I'd assume the answer is supposed to be a $10,000 profit.
What is the source?
Anyway, the car lost 60% of $50,000 in value, or $30,000, but the person was repaid 3/4 of that, so was repaid (3/4)(30,000) = 22,500. So overall the person paid $50,000 for the car and $10,000 for repairs, and was paid $22,500 by the insurance company and $47,500 by whoever bought the car, and net the person took in $70,000 and spent $60,000. So over the course of the events described in the question, the person made a $10,000 profit. That's not actually what the question asks for though -- the question asks only for the profit or loss on the sale of the car. The car was bought for $50,000 and sold for $47,500, so on the sale of the car alone, there was a $2500 loss. So as written, the answer is $2500, but considering how much detail the question provides about insurance etc, I imagine the question writer meant to ask something else, and I'd assume the answer is supposed to be a $10,000 profit.
What is the source?
20 Dec 2021, 20:35
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Explanation:
Actual Cost of car = 50000$
car value after accident, 60% value = 50000 x 0.6 = 30000$
Got insurance money = 75% of car value after accident = 30000 x 0.75 = 22500
Car Got fixed at 10000$
Car Sold = 47500$
Profit = Amount Recovered - Amount Paid
= (47500+22500) - (50000+10000)
= 70000 - 60000
= 10000$
IMO-E
Actual Cost of car = 50000$
car value after accident, 60% value = 50000 x 0.6 = 30000$
Got insurance money = 75% of car value after accident = 30000 x 0.75 = 22500
Car Got fixed at 10000$
Car Sold = 47500$
Profit = Amount Recovered - Amount Paid
= (47500+22500) - (50000+10000)
= 70000 - 60000
= 10000$
IMO-E
