Gce Model Questions Vol1 2018 Commerce Question 17

A consumer buys a washing machine for £720 that comes with a 2‑year warranty covering parts only. After 18 months the machine fails because of a faulty motor. Under the warranty the consumer pays a service charge of £45 (parts are free). He could instead claim a replacement under consumer law, which would allow him to obtain a new machine of the same model at 80 % of the original price, provided he returns the faulty machine that has a market resale value of 30 % of the original price. The consumer decides to keep the original machine, pays the £45 service charge, and after another 6 months the machine fails again due to a different fault not covered by the warranty. The repair cost for this second fault is £180. Calculate the total amount the consumer spends on the washing machine (including purchase, service charge and second repair) and compare it with the net cost he would have incurred had he claimed the replacement at the first failure (including purchase of the replacement at the reduced price and resale of the faulty machine). Which option is cheaper and by how much?