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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Let us assume that cost of milk=100
He sells for 10% profit i.e. for 110
however his cost of milk is only 80 (since 20% is water and only 80% is milk)
now see cost price=80 and sell price=110

% profit= ((110-80)/80)*100=(30/80)*100=37.5%

Assume the total quantity as 100 litre {try this for all similar problems}.
Now for given 20% water in mixture means, 20 L water and 80 L Milk.

Also assume the cost as 1$/litre so CP = 80$ and SP = 100+10%(100) => 110$

NOTE : Marked Price is the price tag on the items. It may or it may not {in case of discounts} be equal to SP.

So profit of 30$ on 80$ which gives 37.5 % profit [(30/80)*100]

Lets take price of the mixture is 100, which has price of milk as 80 and of water as 20.

Mark up price is 110% of 100 is 110.

Actual price of milk is 80 and selling price is 110, so profit percent is 30/80*100% = 37.5%.

D is correct.
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