At a certain supplier, a machine of

[NandishSS]

At a certain supplier, a machine of type A costs $20,000 and a machine of type B costs $50,000. Each machine can be purchased by making a 20 percent down payment and repaying the remainder of the cost and the finance charges over a period of time.If the finance charges= 40 percent of the rremainderof the cost, how much less would 2 machines of type A cost than 1 machine of type B?

A. $10,000
B. $11,200
C. $12,000
D. $12,800
E. $13,200

OA:E

Source:GMATPrep

[DavidG@VeritasPrep]

At a certain supplier, a machine of type A costs $20,000 and a machine of type B costs $50,000. Each machine can be purchased by making a 20 percent down payment and repaying the remainder of the cost and the finance charges over a period of time.If the finance charges= 40 percent of the rremainderof the cost, how much less would 2 machines of type A cost than 1 machine of type B?

A. $10,000
B. $11,200
C. $12,000
D. $12,800
E. $13,200

OA:E

Source:GMATPrep

A: (full cost 20,000):
20% down payment = 4000.
Remainder = 16000.
Finance charges = 40% of 16,000 = 6400.
Total cost = 4000 + 16000 + 6400 = 26,400.
(Cost of 2 = 2*26,400 = 52,800.)

B: (full cost 50,000):
20% down payment =10,000.
Remainder = 40000.
Finance charges = 40% of 40,000 = 16,000
Total cost = 10,000 + 40,000 + 16,000 = 66,000

Difference = 66,000 - 52,800 = 13,200 The answer is E

[DavidG@VeritasPrep]

A shortcut: the difference in price has two components. First, there's the difference in initial cost. Then there's the additional finance charge.

We're comparing 2 A's (initial cost = 40,000) and 1 B (initial cost = 50,000) So that's 10,000 difference

The finance charge is computed after a 20% downpayment has been made, so this charge is on 80% of the remaining cost. And the charge is 40% of this value. So we can compute the additional finance as follows 10,000 * .80 * .40 = 3200 difference

Difference in cost = 10,000 + 3200 = 13200.

[[email protected]]

Hi NandishSS,

This question is really just about basic arithmetic and staying organized. Based on the information in the prompt, there are two 'total costs' that we have to calculate...

Total cost of purchasing 2 Type A machines =

Base Price = (2)($20,000) = $40,000
The 20% down payment = (.2)(2)($20,000) = $8,000
40% Finance Charge on the remainder = (.4)($32,000) = $12,800

Total = $40,000 + $12,800 = $52,800

Total cost of purchasing 1 Type B machine =

Base Price = $50,000
The 20% down payment = (.2)($50,000) = $10,000
40% Finance Charge on the remainder = (.4)($40,000) = $16,000

Total = $50,000 + $16,000 = $66,000

The difference in those two totals is... $66,000 - $52,800 = $13,200

Final Answer: E

GMAT assassins aren't born, they're made,
Rich

[Jeff@TargetTestPrep]

At a certain supplier, a machine of type A costs $20,000 and a machine of type B costs $50,000. Each machine can be purchased by making a 20 percent down payment and repaying the remainder of the cost and the finance charges over a period of time.If the finance charges= 40 percent of the rremainderof the cost, how much less would 2 machines of type A cost than 1 machine of type B?

A. $10,000
B. $11,200
C. $12,000
D. $12,800
E. $13,200

We are given that a machine of type A costs $20,000, and that a machine of type B costs $50,000. We are also given that each machine can be purchased by making a 20 percent down payment and repaying the remainder of the cost and the finance charges over a period of time.

We need to determine the difference in cost between 2 machines of type A and 1 machine of type B.

Let's determine the cost, with finance charges, of 1 machine of type A.

Down payment = 20,000 x 0.2 = 4,000
Remainder = 20,000 - 4,000 = 16,000

Since the remainder of the cost is 16,000, the finance charge is 0.4 x 16,000 = 6,400.

Thus, machine A would cost 20,000 + 6,400 = 26,400, and two machines of type A would cost 26,400 x 2 = 52,800.

Now we can calculate the cost, with finance charges, of 1 machine of type B.

Down payment = 50,000 x 0.2 = 10,000
Remainder = 50,000 - 10,000 = 40,000

Since the remainder of the cost is 40,000, the finance charge is 0.4 x 40,000 = 16,000.

Thus, 1 machine of type B would cost 50,000 + 16,000 = 66,000.

The difference in cost between 2 machines of type A and 1 machine of type B is:

66,000 - 52,800 = 13,200

Answer: E