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January 28th, 2007, 01:45 PM   #1
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Cost of Car

The suggested list price of a new car is $1200. The dealer's cost is 85% of the list. How much will you pay if the dealer is willing to accept $100 over the cost for the car?

(1) How do I set up an equation to solve this question?

(2) In the question itself we read: "The dealer's cost is 85% of the list." Does this mean we are no longer dealing with 85% but actually 15%?

(3) What does the wording "$100 over the cost for the car" mean?
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January 28th, 2007, 07:46 PM   #2
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Re: Cost of Car

The dealer's cost is 0.85 * $1200. The wording means that the dealer is willing to accept no less than ($100 more than his cost).
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January 29th, 2007, 01:22 PM   #3
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ok

Are you saying that the answer can be found by 0.85 * $1200?
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January 29th, 2007, 01:51 PM   #4
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Not quite. It is 1200*.85 + 100. It's good that you are asking questions when you don't understand something. You will learn a lot more that way.
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January 30th, 2007, 02:50 AM   #5
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ok

I totally got it but one thing is not clear:

why must we add 100 to 1200*.85?

Where did 100 come from?
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January 30th, 2007, 02:58 AM   #6
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Quote:
I totally got it but one thing is not clear:
Where did 100 come from?
It says right in the problem! The dealer won't accept a price below 100$ over his own cost, which is 85% of the list price.

(1200*0.85) +100= price you'll pay for the car
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January 30th, 2007, 01:11 PM   #7
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ok

Thanks for letting know.

I did not understand when the problem stated:

"The dealer won't accept a price below 100$ over his own cost, which is 85% of the list price."
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January 30th, 2007, 04:24 PM   #8
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A "model" dealer buys the car at trade price and then sells it at the list price. The list price suggested by the manufacturer is $1200 and the trade price (the dealer's cost) is 85% of the list price, i.e., $1020, so the dealer's profit is $180.

Where the question states "$100 over the cost for the car", "the cost" refers to the trade price of $1020 (i.e., the dealer's cost rather than the cost to you), so the question is stating that the dealer is willing to accept a profit of only $100 by selling the car for $1120.
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February 2nd, 2007, 03:55 PM   #9
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ok

Good replies.
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