137
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Question 137 • Financial Math - MA2007

Anna is trying to save some money on her electric bill. Her electric company has come up with a new plan designed to charge customers based on when they use electricity. She is trying to decide if the new interval use plan would be better than the standard use plan for her needs. Calculate the monthly costs of both plans if she uses 1,185 kWh of electricity per month with 500 kWh on-peak usage and the rest off-peak usage.Standard Use PlanInterval Use Plan8.5 cents/kWh for the first 600 kWh11 cents/kWh for anything over 600 kWhOn-peak hours - 16 cents/kWhOff-peak hours - 4 cents/kWh

Answer
A
standard use plan - $64.35; interval use plan - $80.00
B
standard use plan - $115.35; interval use plan - $107.40
C
standard use plan - $64.35; interval use plan - $107.40
D
standard use plan - $115.35; interval use plan - $80.00

Explanation

For the standard plan, the first 600 kWh cost 600 × $0.085 = $51. The remaining 585 kWh cost 585 × $0.11 = $64.35, for a total of $115.35. For the interval plan, 500 on-peak kWh cost $80, and the remaining 685 off-peak kWh cost 685 × $0.04 = $27.40, totaling $107.40. Choice B gives these two monthly costs.

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