[Guest]

Mr Bee is turning 70 this year. For his birthday his friend Mr Ay and he went out for dinner.

The bill for lunch came to $25.50. Mr Bee paid using his credit card and Mr Ay left a $2.50 tip

in cash. They had agreed beforehand to split the total cost evenly. How many cents does

Mr Ay owe Mr Bee?

[Thalia]

1150 cents?

[Guest]

My quick answer agrees with Thalia:

1. If we are to consider the tip to be an added consideration by Mr. Ay above the agreed on amount or that Mr. Bee also left a tip included with the charge, then the answer would be 1275 cents.

2. Since many cards now give a 1% rebate on charges, a charge of $25.50 only costs Mr. Bee $25.26 (rounding) Hence, assuming Mr. Ays tip is also split, would result in a net amount owed to Bee of 1138 cents.

Combinations of above give alternate possible answers

[Guest]

To note: Bee paid by Credit Card i.e. he has to really pay out when his Card Statement falls due. But Ay paid in cash that is today.

total cost of lunch = 25.50 + 2.50 = 28

Due from each Bee and Ay equal sharing = 14.00

Ay already paid out tip of 2.50. Hence Due additional from him = 14.00 -2.50 = 11.50 $ or 1150 Cents.

BUT there can be a retake on Present Value of total Cost.

Bee settled 25.50 cost of lunch with his Credit Card. We do not know Bees Card statement cycle. it can be min about 20 days (i.e. his transaction just gets into his next statement and for which he has about 18 days to pay up.

Or it can be max 50 days - his last statement came out today so the transaction comes into his statement a month later and he has another 20 days to pay on it.

We alos do not know Bee's cost of Capital (to the tune of 25.50 $). Let us say Bee manages his funds extremely efficiently and mathematically - every penny every second , has options for investment. Say we take an average rate of return on Bee's investment at 8.5 % p.a. This would make the cost of Lunch on credit as :

a. when Bee has to pay in 20 days = 25.38 $

b. when Bee has to pay in 50 days = 25.20 $

Likewise cents owed by Ay

a. [(25.38+2.5)/2 - 2.5] * 100 = 1144

b. [(25.20+2.5)/2 - 2.5] * 100 = 1135

However end of the story is much sweet and simple. That afternoon Bee reclined on his terrace smoking his pipe and fondly remembered the days since this childhood that he spent in the happy company of Ay, catching fish, flying kites, courting the same girl, squabbling over petty things, mourning over his wife's death...... Bee is filled with an immense sense of gratitude for Ay being around in happiness and in sorrow. So when Ay calls up in evening to ask how many he cents he owes, Bee can only exclaim with a choked voice "Dear Friend , there can be no price to match what I owe to you for your friendship. Pls let it be my privilege to pick up the tab for another few moments of contentment in good company ... I can't be hoping to have too many of them anyhow."

[Guest]

Hello!! Nothing. Anyone notice the plan was for a birthday dinner and not lunch !!! Doh!

[Guest]

OMG what a riot.