what, where, and how I need to fix? If there's a step-by-step guide, I would highly appreciate it! thank you
Question:
How many $20 fares would cover the cost of installation solely from the increase in tips (pre-tax but after transaction fees)?
- 200
225
250
275
300
My Work:
1) From the passage, I know average tips increased by 15% because (25%-10%)
"Nevertheless, once the systems were in place, drivers were pleased by the average increase in tips from 10% to 25% (added to the fare), while the potential for additional advertising revenue (via the screens) thrilled the companies."
2) So I took $20 fare and multiply by 15% = 20*0.15=$3 << This is increase of tips
3) Then I took installation cost of $450 to divide by $3 = $150 << I got $150, but this wasn't in the choices, so I picked $200. Although this is correct, but I would like to understand why.
Solution:
1) Particularly, I don't get this part >> $3 – $0.75 = $2.25. >> Why deduct $0.75?
2) Passage stated: "about the 3% processing fee per transaction (levied on both fare and tip)" >> Why do we need to multiply $20 by 25% ?
25% is the result of increased tips; not differences between the old tips and new tips, which would be 15%? (Please see below)
>> $20+15%=$23, then 3% of $23 is $0.69. Thus, increase in tips minus transaction fee is $3 - $0.69 = $2.31. So divide $450 by $2.31, I would get $195.
(I know this is still wrong
Please help explain )Thank you in advance!