80% gone wrong means that we have not been able to understand and convert the question properly.

Ok, the first sentence says that 20% is water, so only 80% is milk. Say 100 litres of mixture contains 80liter of milk.
Next the price has been increased by 10% so if the price was 200, it has become 200+10% of 200=200+20=220.

So, if 100 litre costed 200 earlier, 80 liter would cost (200/100)*80=2*80=160. Now that 80 litre is selling at 220, so a profit of 60 on 160..

As a %, (60/160)*100=600/16=75/2=37.5%

D
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1) Absolute modulus : http://gmatclub.com/forum/absolute-modulus-a-better-understanding-210849.html#p1622372
2)Combination of similar and dissimilar things : http://gmatclub.com/forum/topic215915.html
3) effects of arithmetic operations : https://gmatclub.com/forum/effects-of-arithmetic-operations-on-fractions-269413.html
4) Base while finding % increase and % decrease : https://gmatclub.com/forum/percentage-increase-decrease-what-should-be-the-denominator-287528.html


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