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Expert replies
by MI3 » Sun May 15, 2011 2:04 am
Hello,

Can someone please assist in solving the below problem:

The manufacturer’s suggested retail price (MSRP) of a certain item is $60. Store A sells the item for 20 percent more than the MSRP. The regular price of the item at Store B is 30 percent more than the MSRP, but the item is currently on sale for 10 percent less than the regular price. If sales tax is 5 percent of the purchase price at both stores, what is the result when the total cost of the item at Store B is subtracted from the total cost of the item at Store A?
A. $0
B. $0.63
C. $1.80
D. $1.89
E. $2.10

Many Thanks..[/spoiler]
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Source: — Problem Solving |

by Anurag@Gurome » Sun May 15, 2011 7:56 pm
MI3 wrote:Hello,

Can someone please assist in solving the below problem:

The manufacturer’s suggested retail price (MSRP) of a certain item is $60. Store A sells the item for 20 percent more than the MSRP. The regular price of the item at Store B is 30 percent more than the MSRP, but the item is currently on sale for 10 percent less than the regular price. If sales tax is 5 percent of the purchase price at both stores, what is the result when the total cost of the item at Store B is subtracted from the total cost of the item at Store A?
A. $0
B. $0.63
C. $1.80
D. $1.89
E. $2.10

Many Thanks..[/spoiler]
Solution:
At store A, cost of the item is (120/100) * 60 * (105/100) = $(72 * 1.05).
At store B, cost of the item is (130/100)* (90/100) * 60 * (105/100) = $(70.2 * 1.05).
So, the difference in price is $1.8 * 1.05 = $1.89

The correct answer is D.
Anurag Mairal, Ph.D., MBA
GMAT Expert, Admissions and Career Guidance
Gurome, Inc.
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by MI3 » Sun May 15, 2011 9:40 pm
Thank you, your explanation has made the concept much clearer.
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by Anurag@Gurome » Sun May 15, 2011 9:49 pm
MI3 wrote:Thank you, your explanation has made the concept much clearer.
You are welcome!
Anurag Mairal, Ph.D., MBA
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Gurome, Inc.
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by sachindia » Tue Jan 15, 2013 6:28 am
hi anurag,
do u think such a Q can appear on gmat.. it took around 3 mins to solve.
Regards,
Sach
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