At a certain supplier, a machine of type A costs $30,000 and a machine of type B costs $70,000.
At a certain supplier, a machine of type A costs $30,000 and a machine of type B costs $70,000. 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 are equal to 40 percent of the remainder of the cost, how much less would 2 machines of type A cost than 1 machine of type B under this arrangement?
Answer/Solution
$13,200
Steps/Work
Total Cost of 2 Machines of Type A
= 20% of (Cost of 2 machine A) + remainder + 40 % remainder
= 20% of 30000 + (30000 - 20% of 30000) + 40% of (40000 - 20% of 30000)
= 79200
Total Cost of 1 Machine of Type B
= 20% of (Cost of 1 machine B) + remainder + 40 % remainder
= 20% of 70000 + (70000 - 20% of 70000) + 40% of (50000 - 20% of 70000)
= 92400
Diff = 92400 - 79200 = 13200
Hence, E.
= 20% of (Cost of 2 machine A) + remainder + 40 % remainder
= 20% of 30000 + (30000 - 20% of 30000) + 40% of (40000 - 20% of 30000)
= 79200
Total Cost of 1 Machine of Type B
= 20% of (Cost of 1 machine B) + remainder + 40 % remainder
= 20% of 70000 + (70000 - 20% of 70000) + 40% of (50000 - 20% of 70000)
= 92400
Diff = 92400 - 79200 = 13200
Hence, E.