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Manager
Joined: 01 Nov 2010
Posts: 127
Location: Zürich, Switzerland
A merchant purchased a jacket for $60 and then determined [#permalink] ### Show Tags Updated on: 05 Feb 2012, 13:55 4 9 00:00 Difficulty: 55% (hard) Question Stats: 65% (01:42) correct 35% (01:31) wrong based on 505 sessions ### HideShow timer Statistics A merchant purchased a jacket for$60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale?

(A) $0 (B)$3
(C) $4 (D)$12
(E) $15 Originally posted by Sarang on 06 Nov 2010, 13:32. Last edited by Bunuel on 05 Feb 2012, 13:55, edited 1 time in total. Edited the question and added the OA ##### Most Helpful Expert Reply Math Expert Joined: 02 Sep 2009 Posts: 51218 Re: Profit from a Jacket [#permalink] ### Show Tags 06 Nov 2010, 20:34 11 5 Sarang wrote: A merchant purchased a jacket for$60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale?

(A) $0 (B)$3
(C) $4 (D)$12

### Show Tags

02 Apr 2011, 06:40
Markup = x

x = 0.25(60 + x)

=> 3x/4 = 15

=> x = 20

So SP = 80

But Actual SP = 0.8 * 80 = 64

So profit = $4 Answer - C _________________ Formula of Life -> Achievement/Potential = k * Happiness (where k is a constant) GMAT Club Premium Membership - big benefits and savings Manager Joined: 03 Jun 2010 Posts: 144 Location: United States (MI) Concentration: Marketing, General Management WE: Business Development (Consumer Products) Re: A merchant purchased a jacket for$60 and then determined a selling pr  [#permalink]

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02 Apr 2011, 06:45
Acer86 wrote:
A merchant purchased a jacket for $60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale? (A)$0
(B) $3 (C)$4
(D) $12 (E)$15

Selling price is sp, so
$$sp=60+0.25*sp$$, where $$m*0.25$$ is a markup
sp=80
Discounted the sp by 20% means $$sp-0.2sp=0.8sp$$
$$0.8sp=0.8*80=64$$
Gross profit = 64-purchase price = 64-60=4
(C)
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Re: A merchant purchased a jacket for $60 and then determined a selling pr [#permalink] ### Show Tags 02 Apr 2011, 07:00 Acer86 wrote: A merchant purchased a jacket for$60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale?
(A) $0 (B)$3
(C) $4 (D)$12
(E) $15 First of all, the question has very ambiguous language. They have to distinguish between marked price and selling price and they fail to do that. This is what the question needs to change: A merchant purchased a jacket for$60 and then determined a mark-up price that equaled the purchase price of the jacket plus a markup that was 25 percent of the mark-up price. During a sale, the merchant discounted the mark-up price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale?

Here, mark up was 25% of mark-up price so purchase price was 75% of mark-up price i.e. purchase price was increased by 33.33% to get mark up price (25 is 33.33% of 75)

$$(1 + Mark Up%) * (1 - Discount%)= (1 + Profit%)$$
$$(1 + \frac{1}{3})*(1- \frac{1}{5}) = (1 + Profit%)$$
$$Profit% = \frac{1}{15}$$
Hence you get a profit of $1 for every$15 of purchase price. Since purchase price is 4*15, profit will be 4.

For more on the formula and concept of Mark up, discount, check:
http://www.veritasprep.com/blog/2011/02 ... nt-profit/
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Posts: 659
Re: A merchant purchased a jacket for $60 and then determined a selling pr [#permalink] ### Show Tags 02 Apr 2011, 11:14 Actual Cost =$60
SP = Actual Cost + Mark up

= Actual Cost + 25% SP

= 60*100/75

on sale SP = 80/100(60*75/100) = 64

Gross profit = $4 Answer is C Magoosh Co-Founder Joined: 17 Sep 2011 Posts: 41 Schools: UC Berkeley (Haas) - Class of 2010 Re: percentages [#permalink] ### Show Tags 11 Dec 2011, 20:50 5 This is a bit tricky, it's all in the details. I suspect you read the question like this: Merchant purchases jacket for$60
Merchant prices jacket at 25% more than purchase price. 20% more than $60 =$75
Merchant sells jacket at %20 off. 20% off of $75 =$60
Merchant makes $0 because he bought and sold at$60

But the question actually reads like this:
Merchant purchases jacket for $60 Merchant prices jacket at purchase price + 25% of selling price. Note the difference. Let's break this down. Selling price = purchase price + 25% of selling price 75% of Selling price = purchase price Selling price =$60/75% = $80 Now we can finish the question... Merchant sells jacket at %20 off. 20% off of$80 = $64 Merchant makes$4 because he bought at $60 and sold at$64.

I hope that helps!
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Bhavin Parikh
Magoosh Test Prep

Manager
Joined: 26 Apr 2011
Posts: 213

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11 Dec 2011, 21:38
2
OA is C
purchase price + 25% selling price= 100% selling price
60+ 25% SP= 100% SP
60= 75% SP

s0 100 % SP =80

now 20 % sale means 20 % of 80 = 16
so he sold the jacket at 80-16 = 64 $total profit = 64-60 = 4$
Senior Manager
Joined: 18 Sep 2009
Posts: 285

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12 Dec 2011, 08:41
2
Let the cost price is C,selling price is S.
C=60.
S=C+0.25(S)
0.75(S)=C
3/4(S)=60
S=60*4/3=80.
seller gave a discount of 20% on selling price which is 80. 80*1/5=16(discount price)
Selling price -Discount price=80-16=64 (selling price after discount)
Gross profit= selling price after discount- cost price.=64-60=4
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Posts: 1825
Location: India
Concentration: General Management, Technology
WE: Information Technology (Computer Software)

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18 Jul 2015, 00:39
SP = 60 + 0.25SP

SP = 80
20% discount
Discounted SP = 80 * 0.8 = 64

Profit = 4
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Re: A merchant purchased a jacket for $60 and then determined [#permalink] ### Show Tags 06 Dec 2016, 19:09 PP = purchasing price SP = selling price PP=$60
SP=PP+0.25SP --> 0.75SP=0.60 -->SP=$80 20% off SP = 0.80(80) =$64 (price customer paid)

64-60 = $4 profit C. Intern Joined: 03 Sep 2016 Posts: 3 Re: A merchant purchased a jacket for$60 and then determined  [#permalink]

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15 May 2017, 21:28
hey, is this really 700+ level question in gmat?
Math Expert
Joined: 02 Sep 2009
Posts: 51218

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15 May 2017, 22:15
Bunuel wrote:
saarthak29 wrote:
hey, is this really 700+ level question in gmat?

The difficulty level is calculated automatically based on the timer stats from the users which attempted the question. So, yes it is a 700-level question.

hey, is it possible to send you private message?
Math Expert
Joined: 02 Sep 2009
Posts: 51218

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19 May 2017, 05:20
Sarang wrote:
A merchant purchased a jacket for $60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale? (A)$0
(B) $3 (C)$4
(D) $12 (E)$15

We are given that a jacket was purchased for 60 dollars. The jacket was sold for a price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. We can let the selling price = p, and thus the selling price is 60 + 0.25p. We can create the following equation and solve for p:

p = 60 + 0.25p

Multiply the equation by 4, we have:

4p = 240 + p

3p = 240

p = 80

Since the selling price was then discounted 20%, the discounted price was:

0.8(80) = 64

Thus, the profit on the sale was 64 - 60 = $4. Answer: C _________________ Scott Woodbury-Stewart Founder and CEO GMAT Quant Self-Study Course 500+ lessons 3000+ practice problems 800+ HD solutions Manager Joined: 12 Jun 2016 Posts: 216 Location: India Concentration: Technology, Leadership WE: Sales (Telecommunications) Re: A merchant purchased a jacket for$60 and then determined  [#permalink]

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17 Jun 2017, 22:05
Hello VeritasPrepKarishma,

Firstly, apologies for asking a clarification on an old post!!

I am not able to follow the highlighted part of the solution. I do understand that you have used the successive percentage formula. But unable to understand why is - $$(1 + \frac{1}{3})*(1- \frac{1}{5}) = (1 + Profit)$$%?

Can you please explain in a bit more detail.

VeritasPrepKarishma wrote:
Acer86 wrote:
A merchant purchased a jacket for $60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale? (A)$0
(B) $3 (C)$4
(D) $12 (E)$15

First of all, the question has very ambiguous language. They have to distinguish between marked price and selling price and they fail to do that. This is what the question needs to change:

A merchant purchased a jacket for $60 and then determined a mark-up price that equaled the purchase price of the jacket plus a markup that was 25 percent of the mark-up price. During a sale, the merchant discounted the mark-up price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale? Here, mark up was 25% of mark-up price so purchase price was 75% of mark-up price i.e. purchase price was increased by 33.33% to get mark up price (25 is 33.33% of 75) [m](1 + Mark Up%) * (1 - Discount%)= (1 + Profit%)[/m] $$(1 + \frac{1}{3})*(1- \frac{1}{5}) = (1 + Profit%)$$ $$Profit% = \frac{1}{15}$$ Hence you get a profit of$1 for every $15 of purchase price. Since purchase price is 4*15, profit will be 4. For more on the formula and concept of Mark up, discount, check: http://www.veritasprep.com/blog/2011/02 ... nt-profit/ _________________ My Best is yet to come! EMPOWERgmat Instructor Status: GMAT Assassin/Co-Founder Affiliations: EMPOWERgmat Joined: 19 Dec 2014 Posts: 13087 Location: United States (CA) GMAT 1: 800 Q51 V49 GRE 1: Q170 V170 Re: A merchant purchased a jacket for$60 and then determined  [#permalink]

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06 Mar 2018, 13:53
Hi All,

This question is essentially just a "math" question. How you set up the math (and work through the steps) is up to you though (you can use fractions, decimals or percents):

Purchase price = $60 Selling price =$60 + 25% of the Final Price
Final Price = X

$60 + .25X = X$60 = .75X
$60 = (3/4)(X) Now, multiply both sides by 4/3$60(4/3) = (4/3)(3/4)X
$240/3 = (12/12)X$80 = X

During the sale, the selling price was discounted by 20%

$80 - 20%($80) = Final Selling Price
$80 - 1/5($80) =
$80 -$16 =
$64 The Gross Profit = Final Price - Purchase Price$64 - $60 =$4

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Special Offer: Save $75 + GMAT Club Tests Free Official GMAT Exam Packs + 70 Pt. Improvement Guarantee www.empowergmat.com/ *****Select EMPOWERgmat Courses now include ALL 6 Official GMAC CATs!***** Re: A merchant purchased a jacket for$60 and then determined &nbs [#permalink] 06 Mar 2018, 13:53

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