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by grandh01 » Thu Aug 09, 2012 10:46 pm
Last year the annual premium on a
certain hospitalization insurance
policy was $408, and the policy paid
80 percent of any hospital expenses
incurred. If the amount paid by the
insurance policy last year was equal to
the annual premium plus the amount
of hospital expenses not paid by the
policy, what was the total amount of
hospital expenses last year?
(A) $850.00
(B) $680.00
(C) $640.00
(D) $510.00
(E) $326.40

OA is B
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Source: — Problem Solving |

by Anurag@Gurome » Thu Aug 09, 2012 11:02 pm
grandh01 wrote:Last year the annual premium on a
certain hospitalization insurance
policy was $408, and the policy paid
80 percent of any hospital expenses
incurred. If the amount paid by the
insurance policy last year was equal to
the annual premium plus the amount
of hospital expenses not paid by the
policy, what was the total amount of
hospital expenses last year?
(A) $850.00
(B) $680.00
(C) $640.00
(D) $510.00
(E) $326.40

OA is B
Let us assume that total hospital expenses = T
Then amount paid = premium + amount not paid
80% of T = $408 + 20% of T
0.80T = 408 + 0.20T
0.60T = 408
T = $680
So, total hospital expenses = $680

The correct answer is B.
Anurag Mairal, Ph.D., MBA
GMAT Expert, Admissions and Career Guidance
Gurome, Inc.
1-800-566-4043 (USA)

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by truplayer256 » Fri Aug 10, 2012 6:20 am
Let x be the total amount of hospital expenses last year.
Amt. paid by insurance policy last year = 408 + 0.20(x) = 0.8(x)
408 = 0.6(x) => x = 408(5/3) = $680
Choose B.
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