Solution
Given:• Mark up percentage over purchase price = 25%
• Mark off percentage at clearance sale = 10%
To find:• Dealer’s profit amount
Approach and Working: If we assume the purchase price as x,
• Price after mark-up = x * 1.25 = 1.25x
As the mark-off percentage is 10%,
• Price after discount = 1.25x * 0.9 = 1.125x = selling price
• Therefore, profit amount = selling price – purchase price = 1.125x – x = 0.125x
• Profit, as a percentage of purchase price = \(\frac{0.125x}{x} * 100\) = 12.5%
Hence, the correct answer is option B.
Answer: BNote: calculation will become easier if we assume purchase price equal to 100
• Purchase price = 100
• Mark-up price = 100 * 1.25 = 125
• Selling price = 125 * 0.9 = 112.5
• Profit = 112.5 – 100 = 12.5
• Profit percentage = \(\frac{12.5}{100} * 100\) = 12.5%
_________________