bicycle repair vs new bicycle

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bicycle repair vs new bicycle

by kanha81 » Mon Mar 02, 2009 12:22 pm
I honestly don't understand this question. I could figure out the first step, but the last 2 steps no clue what to do!!!

q: Ann can have her bicycle repaired for $50, or she can trade in and recieve $22 credit toward the new bicycle that sells for $107. If Ann trades in the bicycle, the cost to her of purchasing the new bicycle is what percent greater than the cost of having her current bicycle repaired?

i) 44%
ii) 60%
iii) 70%
iv) 114%
v) 170%

cost of purchasing new bicycle=107-22=85
=> 85=p%...............
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by truplayer256 » Mon Mar 02, 2009 12:55 pm
The correct answer is C.)70%. Here's why:

If Ann gets her bicycle repaired, she'll pay $50. If Ann trades her old bicycle in and gets $22 credit on a new bicyle that sells for $107, she'll pay 107-22=$85.

50*x/100=85
x=170%
170%-100%=70% increase

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by [email protected] » Mon Mar 02, 2009 3:16 pm
I don't know if this is a correct way of looking at it but I am an accounting major and deal with "cost" all the time.

New bike-- 107
Credit-- 22
---------------------
85

No matter what she does she will spend that $50. It is what we accountants call a sunk cost:

Therefore: 85-50=35

35/50= 70% "C"