The local garbage company charges $6 a month for garbage collection. It had been
ID: 1099846 • Letter: T
Question
The local garbage company charges $6 a month for garbage collection. It had been their practice to send out bills to their 100,000 customers at the end of each 2 month period. Thus, at the end of February it would send a bill to each customer for $12 for garbage collection during January and February.
Recently the firm changed its billing date: it now sends out the 2 month bills after one month's service has been performed. Bills for January-February, for example, are send out at the end of January. The local newspaper points out that the firm is receiving half its money before the garbage collection. This unearned money, the newspaper says, could be temporarily invested for one month at 1% per month interest by the garbage company to earn extra income.
Compute how much extra income the garbage company could earn each year if it invests the money as described by the newpaper.
Please show how to get the answer.
Explanation / Answer
In case 1: For a single customer, money collected at the end of every two months = $12
In case 2:
Total money earned per customer in 2 months = 12 + 6*1*(1)/100 = 12 + 0.06 = $12.06
Extra money per customer = 12.06 - 12 = 0.06
Extra money per customer in a year = 6 * 0.06 = $0.36
Total extra money = $0.36 * 100,000 = $36000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.