A merchant purchased a jacket for $60 and then determined a selling pr

Question

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

PS95402.01

A. $0
B. $3
C. $4
D. $12
E. $15

PS95402.01

bhavinp · Accepted Answer

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!

Bunuel · Answer

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.

nov79 · Answer

60*1.25=75
75*0.8=60
60-60=0
the answer is A

subhashghosh · Answer

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

KarishmaB · Answer

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 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

PS95402.01

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.

PareshGmat · Answer

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

saarthak29 · Answer

hey, is this really 700+ level question in gmat?

Bunuel · Answer

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.

ScottTargetTestPrep · Answer

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

EMPOWERgmatRichC · Answer

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

Final Answer:  C

GMAT assassins aren't born, they're made, 
Rich

BrentGMATPrepNow · Answer

Let  x  = the SELLING PRICE

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.   
We can write:  x  = $60 + (25% of  x )
In other words,  x  = $60 + 0.25 x )
Subtract 0.25x from both sides to get: 0.75x = 60
Divide both sides by 0.75 to get: x = 80
So the selling price is  $80

During a sale, the merchant discounted the selling price by 20 percent and sold the jacket.   
We can write: DISCOUNTED price =  $80  - (20% of  $80 )
=  $80  - (0.20)( $80 )
=  $80  - $16
= $64

What was the merchant's gross profit on this sale?  
Gross profit = $64 - $60 = $4

Answer: C

Cheers, 
Brent

DeeptiManyaExpert · Answer

CP = $60

SP = 60 + MP

MP = 0.25(60 + MP) 
Solve to get  MP = 20

Therefore,  SP  = 60 + 20 =  80

NEW SP  = 0.80(80) =  64

Profit  = 64 - 60 =  4

Answer -  C

GMATGuruNY · Answer

Apply the given percentages to a $100 selling price to determine the following ratio:
 \frac{profit}{purchase-price}

Let the selling price = $100

A merchant determined...a selling price that equaled the purchase price of the jacket plus a markup that was 25 percent. 
Since the markup is 25% of the $100 selling price -- implying a markup of $25 -- the purchase price for the jacket = 100-25 = $75

During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. 
Since the $100 selling price is discounted by 20% -- to $80, yielding $5 in profit beyond the $75 purchase price -- we get:
 \frac{profit}{purchase-price} = \frac{5}{75} = \frac{1}{15}

Applying this ratio to the $60 purchase price in the prompt. we get:
profit  = \frac{1}{15} * 60 = 4

C

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A merchant purchased a jacket for $60 and then determined a selling pr

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