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8.6 HOW MUCH DO "FREE" LONG DISTANCE WEEKENDS COST? - FINANCIAL MATH, SIMPLE
MATHEMATICS, EXAMPLES FOR PERSONAL FINANCES
Long
distance company A is offering "free" weekend calling if you pay a flat fee of $25 per
month.
Company
B on the other hand offers 12 cents a minute calling Saturday and 5 cent Sundays with no
fee.
Assuming
a cost of 8.5 cents per minute on the weekend (average of 12 cents on Saturday and 5 cents
on Sunday) for company B, how many minutes would you need to talk on the weekends with
company A before you started to save money over company B?
Answer:
2500 cents divide by 8.5 cents = 294 minutes or about 5 hours a month or 1 hour 15 minutes
each weekend.
Let's
test this answer by using total minutes that are more and also less than the 5 we arrived
at above.
With
Company A:
If
you talked for 8 hours on the weekends each month, you would be paying 2500 cents divide
by 480 minutes = 5.21 cents per minute.
A
savings of 8.5 cents minus 5.21 cents = 3.29 cents per minute or a savings of 3.29 cents X
480 minutes = $15.79 per month over company B
If
you talked for only 4 hours on weekends each month, you would be paying 2500 cents divide
by 240 minutes = 10.42 cents per minute.
A
cost increase of 10.42 cents minus 8.5 cents =1.92 cents per minute or increased cost of
1.92 cents X 240 minutes = $4.61 per month more than company B.
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