Verbal Section
Critical Reasoning
A man is flying from New York to Germany on business. He has two options. Option A will result in a total travel time of five hours. The cost is $350. Option B involves a layover, and will result in a total travel time of eight hours. The total cost is $150. After the man considers his lost wages and the cost of the tickets, he chooses option A.1. If the following statements are true, which of the following assertions is best supported?
A) The man's hourly wage is equal to or less than $30/hour.
B) The man's hourly wage is equal to or less than $40/hour.
C) The man should have chosen option B to avoid financial losses.
D) The man will neither lose nor gain, regardless of which option he chooses.
E) The man should have chosen option B if he makes less than $60/hour.
Correct Answer: E
Explanation: Option A involves five hours of travel, and the cost is $350. Option B involves three additional hours of travel, but the man saves $200. This represents his lost wages. Dividing $200 by 3 results in $66.67/hour. Therefore, unless the man makes more than this each hour, option B represents the wiser choice from a financial standpoint.
A woman bought a Mercedes Benz in 1998. She paid $80,000. The car loses 20% of its value each year. It is 2006. She was recently in a car accident, and the car was extensively damaged. The total cost of the parts is $15,000. Labor costs are $65/hour.
2. If the following statements are true, which of the following assertions is best supported?
A) The woman will lose money if the car takes more than five hours to repair.
B) The woman would break even if there were no labor costs.
C) The woman will lose money, regardless of how long the repairs take.
D) The woman will gain money if repairs take less than eight hours.
E) The woman would gain money if parts were $12,000 and the repairs took less than 20 hours.
Correct Answer: C
Explanation: The first thing that must be calculated is how much the woman's car is presently worth. Eight years have passed since it was purchased, and it decreases in value by 20% each year. It is easiest to set up a table.
| Year | Value | Reduction in Value | New Value |
| 1998 | $80,000.00 | ||
| 1999 | $80,000.00 | $16,000.00 | $64,000.00 |
| 2000 | $64,000.00 | $12,800.00 | $51,200.00 |
| 2001 | $51,200.00 | $10,240.00 | $40,960.00 |
| 2002 | $40,960.00 | $8,192.00 | $32,768.00 |
| 2003 | $32,768.00 | $6,553.60 | $26,212.40 |
| 2004 | $26,212.40 | $5,242.88 | $20,969.52 |
| 2005 | $20,969.52 | $4,193.90 | $16,775.62 |
| 2006 | $16,775.62 | $3,335.12 | $13,440.50 |
The woman's car is now worth less than the cost of the parts to repair it. Regardless of the cost of labor, she would lose money if she decided to purchase the parts necessary to fix the car.