A software vendor sells a spreadsheet licence at a base price of $\,120{,}000$ Naira per licence. Volume discounts are applied as follows: 5-9 licences - 5% discount; 10-19 licences - 10% discount; 20 or more licences - 15% discount. An annual maintenance fee equal to 12% of the discounted purchase price is charged each year. A school wishes to buy 13 licences and pay for three years of maintenance in advance.
(a) What is the total amount the school must pay for the purchase option?
(b) The vendor also offers a subscription model at $\,25{,}000$ Naira per licence per year. Which option is cheaper for the school over the same three‑year period, and by how much?

Question

A software vendor sells a spreadsheet licence at a base price of $\,120{,}000$ Naira per licence. Volume discounts are applied as follows: 5-9 licences - 5% discount; 10-19 licences - 10% discount; 20 or more licences - 15% discount. An annual maintenance fee equal to 12% of the discounted purchase price is charged each year. A school wishes to buy 13 licences and pay for three years of maintenance in advance. 
(a) What is the total amount the school must pay for the purchase option? 
(b) The vendor also offers a subscription model at $\,25{,}000$ Naira per licence per year. Which option is cheaper for the school over the same three‑year period, and by how much?

Accepted Answer

Total purchase cost = 1,909,440 Naira; subscription cost = 975,000 Naira; subscription is cheaper by 934,440 Naira.

Gce Model Questions Vol1 2020 Computer Studies Question 38

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