Can anyone who’s very good at maths understand this?

[ijustlikehouston]

This question might not make sense. The book doesn’t seem to give you a formula to understand it.

Is it B, $96,000?

Im good at maths, but I don’t understand the context of the question to know how to work it out.

I'd guess £80000

I get 96,000. 0.8 x 600,000 x (300-250)/250
But I don't guarantee I'm right.

@ijustlikehouston I'd say 96k

increase is 20% (300-250)/250

20% increase is 600x 0.2 = 120

80% of this is 96k

@nocoolnamesleft 🙌

It isn’t very well written. But I would say

250 to 300 is 20% increase

20% of 600 = 120

80% refundable so 120x0.8 =96 ie B

I am very good at maths but I think the key is knowing how clauses like this normally work, which I don’t. You need to know how such indexation is applied.

But yes, everyone else’s reasoning makes sense mathematically.

Seems funny American language to me.

I am a Chief Financial Officer and it's double dutch to me.

But, I am going with £96k as above.

I think - you need maths to work it out, but it's not a maths question, if that makes sense!

So the cost index increased from 250 to 300 = cost increase of 20%

Costs = £600,000. So the amount of the increase is 20% of $600,000 = $120,000

Supplier receives 80% of the increase in costs = $120,000 times 80% = $96,000

It's a

The cost has increased by 20% (increase from 250 to 300) so the original cost would have been 500,000. Therefore the cost has increased by 100,000, 80% of which is 80k (answer a)

B 96K

They're entitled to receive the cost increase (20%) of 80% of their costs.

96,000

The increase in inflation is 20%, 120% of 600000 = 720000. The inflation allowed for is 120000. Only 80% of the inflation is a reimbursable allowance so 80% of £120000 is £96000

@LordEmsworth 600,000=120%, therefore you need to divide by 1.2 to find the original cost and calculate the increase

It’s a certification recognised in most countries so I think that’s why it’s in $ rather than £.

But yes the answer is B. I have NO idea how though with the formula they used. Why the -1?!

[quote SummerSazz]@ijustlikehouston I'd say 96k

increase is 20% (300-250)/250

20% increase is 600x 0.2 = 120

80% of this is 96k[/quote]
Yip, agree with this

250 to 300 = 120%
600k = 120%
500k = 100%
increase = 100k
80% of 100k = 80k

You need to understand what is being asked of you

300/250 = 1.2 or 120%
hence the -1

@User0ne, costs are estimated at the beginning of the contract, that being the $600K. The allowance is to take into account that most but not all goods will be bought at that price, and so a margin is built in to allow for increases.

@Postdatedpandemic

300/250 = 1.2 or 120% hence the -1

I’m so sorry that still makes no sense. 1.2 and 120 are not -1

Sorry I know I’m dumb

1.2 is 120% - 1 from this is 0.2 = 20%

I think it's a.

Cost increase is 100,000 (600,000 at £300 would be 500,000 at £250)

And you can claim 80% of that.

Ah so the 600k represents the 250 cost index not the 300. It would be 96k then - I was making it a harder question (still GCSE maths though)

@User0ne

Ah so the 600k represents the 250 cost index not the 300. It would be 96k then - I was making it a harder question (still GCSE maths though)

Ok ... thanks. I already feel dumb without the GCSE comment.