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# ps1000 - set 7 merchant question

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Manager
Joined: 02 Oct 2005
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ps1000 - set 7 merchant question [#permalink]

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30 Jan 2006, 05:19
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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 merchantâ€™s gross profit on this sale?
(A) \$0
(B) \$3
(C) \$4
(D) \$12
(E) \$15

I think the ans is clearly (A), however, it is mentioned as (C) in the ans set.

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Intern
Joined: 27 Jun 2005
Posts: 4

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30 Jan 2006, 06:58
its C.

PP = 60

sp = PP + (25/100) * sp

==> sp = 80

but sold @ 20% discount ==> sp * 80/100 ==> 64 \$

==> 64-60 = 4 \$ is the gross profit.

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CEO
Joined: 21 Jan 2007
Posts: 2734

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Location: New York City

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29 May 2007, 00:44
nenuphani wrote:
its C.

PP = 60

sp = PP + (25/100) * sp

==> sp = 80

but sold @ 20% discount ==> sp * 80/100 ==> 64 \$

==> 64-60 = 4 \$ is the gross profit.

thanks.

retail = cost + (1/4)*(retail)
x = 60 + 1/4(x)
4x= 240 + x
3x = 240
x=80

80*(.8)=64

64-60=4

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GMAT Club Legend
Joined: 07 Jul 2004
Posts: 5034

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Location: Singapore

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29 May 2007, 02:16
Seling price of jacket, S = 60+0.25S -> 0.75S = 60 -> S = 80
Selling price of jacket at sale = 0.8 * 80 = 64 dollars.

Overall profit = 4 dollars.

Kudos [?]: 438 [0], given: 0

29 May 2007, 02:16
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