Question 11 • 26-27 Ignite Technical Math-Financial Math - MA2007
The paragraph below comes from the rental agreement Susan signed when she opened her account at Super Video. "All rentals are due back by midnight of the due date as printed on the transaction receipt. Any rental not received by midnight on the day it is due is subject to a late charge of $1.50 for each day it is late. Any rental not returned by the fifth day after the due date will be transferred to a sale. The Customer will then be required to pay the purchase price of the item in addition to five (5) days of late fees. The Customer will not be required to return the product once the total balance is paid." As of today, Susan's movie is currently five days late. She knows that if she doesn't get the movie back tonight, she will be charged $9.99, the purchase price of the movie, plus five days' worth of late fees. A round trip cab ride to the video store will cost about $10. Which of the following statements is true?
Answer
A
Taking a cab to return the movie is the cheapest action.
B
Keeping the movie is cheaper than taking a cab to return it.
C
It would cost more to keep the movie then to return the movie.
D
If Susan returns the movie, she would not have to pay late fees. .
Explanation
Keeping the movie means Susan pays $9.99 for the purchase price plus five days of late fees at $1.50 per day: $9.99 + ($1.50 × 5) = $17.49. Returning it by cab costs about $10, and returning it does not erase the late fees, but the cab trip is still cheaper than paying $17.49. Thus, the true statement is “Keeping the movie is cheaper than taking a cab to return it” only if the cab cost is compared with the purchase price and fees? Since $17.49 is more than $10, that statement is false; instead, taking a cab is cheaper.
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