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A merchant purchased a jacket for $60 and then determined

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A merchant purchased a jacket for $60 and then determined [#permalink]

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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
[Reveal] Spoiler: OA

Last edited by Bunuel on 05 Feb 2012, 13:55, edited 1 time in total.
Edited the question and added the OA
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Re: Profit from a Jacket [#permalink]

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New post 06 Nov 2010, 13:38
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60*1.25=75
75*0.8=60
60-60=0
the answer is A
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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


No, answer A is not correct. Note that we are told that: "markup ... was 25 percent of the selling price".

Step by step:

Let the markup be \($x\), so \(x\) must be 25% of the selling price \(60+x\): \(x=0.25(60+x)\) --> \(x=20\) --> selling price will be \(60+20=80\).

The price after discount of 20% will be \(80*0.8=64\) --> gross profit on the sale will be final selling price - cost of the jacket = \($64 - $60 = $4\).

Answer: C.
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A merchant purchased a jacket for $60 and then determined a selling pr [#permalink]

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New post 02 Apr 2011, 05:45
A merchant purchased a jacket for $60 and then determined a selling price that equaled 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
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Re: A merchant purchased a jacket for $60 and then determined a selling pr [#permalink]

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New post 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
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Re: A merchant purchased a jacket for $60 and then determined a selling pr [#permalink]

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New post 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]

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New post 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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Re: A merchant purchased a jacket for $60 and then determined a selling pr [#permalink]

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New post 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
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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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Re: percentages [#permalink]

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New post 11 Dec 2011, 21:38
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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 $
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Re: percentages [#permalink]

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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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Let selling price = x
So, x = 60 + 25x/100
Calculating above, x = 80
Selling price = 80

20% Discount on Selling price = 64
So, profit = 64-60 = 4 Answer = C
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Re: A merchant purchased a jacket for $60 and then determined [#permalink]

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New post 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]

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New post 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.
Re: A merchant purchased a jacket for $60 and then determined   [#permalink] 06 Dec 2016, 19:09
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