BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem

The price of a certain computer is discounted by 20% every

This topic has expert replies
Post new topic Post Reply
Previous Topic Next Topic
Source: — Problem Solving |

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 16207
Joined: Mon Dec 08, 2008 6:26 pm
Location: Vancouver, BC
Thanked: 5254 times
Followed by:1268 members
GMAT Score:770

by Brent@GMATPrepNow » Wed Mar 25, 2015 8:51 am
gmat_winter wrote:The price of a certain computer is discounted by 20% every year. After 3 years have passed the price of the computer will have been discounted by what fraction of the original price?

A)9/25
B)61/125
C)64/125
D)3/5
E)16/25

OAB
If the computer price decreases 20%, then it retains 80% of its value.
So, for example, if the original price is $50, then after 1 year, the reduced price = 80% of $50 (i.e., $40)
NOTE: 80% = 4/5

Year 0: let the price = x
After 1 year: the price = x(4/5)
After 2 years: the price = x(4/5)(4/5)
After 3 years: the price = x(4/5)(4/5)(4/5)

So, after 3 years the price = x(64/125)
So, the price is now 64/125 of the original price.
BE CAREFUL, the question actually asks us how much the price has been DISCOUNTED.
So, if the computer RETAINS 64/125 of its original value, then it has been DISCOUNTED by 61/125

Answer: B

Cheers,
Brent
Brent Hanneson - Creator of GMATPrepNow.com
Image
Top
User avatar
GMAT Instructor
Posts: 15539
Joined: Tue May 25, 2010 12:04 pm
Location: New York, NY
Thanked: 13060 times
Followed by:1906 members
GMAT Score:790

by GMATGuruNY » Wed Mar 25, 2015 10:00 am
gmat_winter wrote:The price of a certain computer is discounted by 20% every year. After 3 years have passed the price of the computer will have been discounted by what fraction of the original price?

A)9/25

B)61/125

C)64/125

D)3/5

E)16/25

OAB
Let the original price = 1000.
1st year price = 1000 - 20% of 1000 = 1000-200 = 800.
2nd year price = 800 - 20% of 800 = 800-160 = 640.
3rd year price = 640 - 20% of 640 = 640-128 = 512.
Total discount = 1000-512 = 488.
Resulting fraction:
(discount)/(original) = 488/1000 = 61/125.

The correct answer is B.
Private tutor exclusively for the GMAT and GRE, with over 20 years of experience.
Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.

As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.

For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
Student Review #2
Student Review #3
Top

GMAT/MBA Expert

User avatar
Elite Legendary Member
Posts: 10392
Joined: Sun Jun 23, 2013 6:38 pm
Location: Palo Alto, CA
Thanked: 2867 times
Followed by:511 members
GMAT Score:800

by [email protected] » Wed Mar 25, 2015 6:10 pm
Hi gmat_winter,

In these types of questions, TESTing VALUES is a great way to get to the correct answer. Typically, when you see percents in these types of questions, it's best to TEST the number 100. However, the answer choices to this question point to the number 125 as the likely "perfect" starting number (since all of the answers are either out of 125 or reduced from 125).

We're told that the price of a computer is discounted 20% each year for 3 years. We're asked for the fraction of the DISCOUNT (relative to the original price) at the end of 3 years...

Starting Price = $125

Year 1: 125 - .2(125) = 100

Year 2: 100 - .2(100) = 80

Year 3: 80 - .2(80) = 64

Since the ending price is $64, the discount was $61

The discount relative to the original price is 61/125

Final Answer: B

GMAT assassins aren't born, they're made,
Rich
Contact Rich at [email protected]
Image
Top

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 16207
Joined: Mon Dec 08, 2008 6:26 pm
Location: Vancouver, BC
Thanked: 5254 times
Followed by:1268 members
GMAT Score:770

by Brent@GMATPrepNow » Sat Jan 13, 2018 6:24 am
gmat_winter wrote:The price of a certain computer is discounted by 20% every year. After 3 years have passed the price of the computer will have been discounted by what fraction of the original price?

A)9/25

B)61/125

C)64/125

D)3/5

E)16/25

OAB
If the computer price decreases 20%, then it retains 80% of its value.
So, for example, if the original price is $50, then after 1 year, the reduced price = 80% of $50 (i.e., $40)
NOTE: 80% = 4/5

Year 0: let the price = x
After 1 year: the price = x(4/5)
After 2 years: the price = x(4/5)(4/5)
After 3 years: the price = x(4/5)(4/5)(4/5)

So, after 3 years the price = x(64/125)
So, the price is now 64/125 of the original price.
BE CAREFUL, the question actually asks us how much the price has been DISCOUNTED.
So, if the computer RETAINS 64/125 of its original value, then it has been DISCOUNTED by 61/125

Answer: B

Cheers,
Brent
Brent Hanneson - Creator of GMATPrepNow.com
Image
Top

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 8086
Joined: Sat Apr 25, 2015 10:56 am
Location: Los Angeles, CA
Thanked: 43 times
Followed by:29 members

by Scott@TargetTestPrep » Sun Aug 11, 2019 6:51 pm
gmat_winter wrote:The price of a certain computer is discounted by 20% every year. After 3 years have passed the price of the computer will have been discounted by what fraction of the original price?

A)9/25

B)61/125

C)64/125

D)3/5

E)16/25

OAB
After 3 years, the discounted price of the computer is 4/5 x 4/5 x 4/5 = 64/125 of the original price. So the computer will have been discounted by 1 - 64/125 = 125/125 - 64/125 = 61/125 of the original price.

Answer: B

Scott Woodbury-Stewart
Founder and CEO
[email protected]

Image

See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews

ImageImage
Top
Post new topic Post Reply
• Page 1 of 1